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PART
XI
WINDING UP
PRELIMINARY
298.
Liability as contributories of present and past members.-- (1) In the event of a
company being wound up, every present and past member shall, subject to the provisions of
section 299, be liable to contribute to the assets of the company to an amount sufficient
for payment of its debts and liabilities and the costs, charges and expenses of the
winding up, and for the adjustment of the rights of the contributories among themselves,
with the qualifications following, that is to say-
(2) In the winding up of a company limited by guarantee which has a share capital, every
member of the company shall be liable, in addition to the amount undertaken to be
contributed by him to the assets of the company in on any shares held by him, as if the
company were a company limited by shares--
(i) a past member shall not be liable to contribute if he has ceased to be a member for
one year or upwards before the commencement of the winding up;
(ii) a past member shall not be liable to contribute in respect of any debt or liability
of the company contracted after he ceased to be a member;
(iii) a past member shall not be liable to contribute unless it appears to the Court that
the present members are unable to satisfy the contributions required to be made by them n
pursuance of this Ordinance;
(iv) in the case of a company limited by shares, no contribution shall be required from
any past or present member exceeding the amount, if any, unpaid on the shares in respect
of which he is liable as such member;
(v) in the case of a company limited by guarantee, no contribution shall, subject to the
provisions of subsection (2), be required from any past or present member exceeding the
amount undertaken to be contributed by him to the assets of the company in the event of
its being wound up;
(vi) nothing in this Ordinance shall invalidate any provision contained in any policy of
insurance or other contract whereby the liability of individual numbers on the policy or
contract is restricted, or whereby the funds of the company are alone made liable in
respect of the policy or contract; and
(vii) a sum due to any past or present member of a company in his character as such, by
way of dividends, profits or otherwise, shall not be deemed to be a debt of the company
payable to that member in a case of competition between himself and any other creditor not
being a member of the company, but any such sum may be taken into account for the purpose
of the final adjustments of the rights of the contributories among themselves.
(2) In the winding up of a company limited by guarantee which has a share capital, every
member of the company shall be liable, in addition to the amount undertaken to be
contributed by him to the assets of the company in on any shares held by him, as if the
company were a company limited by shares.
299. Liability of directors whose liability is unlimited.-- In the
winding up of a limited company any director, whether past or present, whose liability is,
in pursuance of this Ordinance, unlimited, shall, in addition to his liability, if any, to
contribute as an ordinary member, be liable to make a further contribution as if he were,
at the commencement of the winding up, a member of an unlimited company:
Provided that--
(i) a past director shall not be liable to make such further contribution if he has ceased
to hold office for a year or upwards before the commencement of the winding up;
(ii) a past director shall not be liable to make such further contribution in respect of
any debt or liability of the company contracted after he ceased to hold office;
(iii) subject to the articles, a director shall not be liable to make such further
contribution unless the Court deems it necessary to require that contribution in order to
satisfy the debts and liabilities of the company, and the costs, charges and expenses of
the winding up.
300. Definition of "contributory".-- The term
"contributory" means every person liable to contribute to the assets of a
company in the event of its being wound up, and includes the holder of any shares which
are fully paid-up; and, in all proceedings for determining, and all proceedings prior to
the final determination of, the persons who are to be deemed contributories, includes any
person alleged to be a contributory.
301. Nature of liability of contributory.-- (1) The liability of
contributory shall create a debt accruing due from him at the time when his liability,
commenced, but payable at the time specified in calls made on him for enforcing the
liability.
(2) No claim founded on the liability of a contributory shall be cognizable by any Court
of Small Causes.
302. Contributories in case of death of member.-- (1) If a
contributory dies either before or after he has been placed on the list of contributories,
his legal representatives shall be liable, in a due course of administration, to
contribute to the assets of the company in discharge of his liability, and shall be
contributories accordingly.
(2) If the legal representatives make default in paying any money ordered to be paid by
them, proceedings may be taken for administering the property of the deceased
contributory, and of compelling payment thereout of the money due.
303. Contributory in case of insolvency of member.-- If a
contributory is adjudged insolvent either before or after he has been placed on the list
of contributories, then--
(a) his assignees in insolvency shall represent him for all the purposes of the winding
up, and shall be contributories accordingly, and may be called on to admit to proof
against the estate of the insolvent, or otherwise to allow to be paid out of his to be
paid out of his assets in due course of law, any money due from the insolvent in respect
of his liability to contribute to the assets of the company; and
(b) there may be proved against the estate of the insolvent the estimated value of his
liability to future calls as well as calls already made.
304. Contributories in case of winding up of a body corporate which
is a member.-- If a body corporate which is a contributory is- ordered to be wound up,
either before or after it has been placed on the list of contributories,
(a) the liquidator of the body corporate shall represent it for all proposes of the
winding up of the company and shall be a contributory accordingly, and may be called on to
admit to proof against the assets of the body corporate, or otherwise to allow to be paid
out of its assets in due course of law, any money due from the body corporate in respect
of its liability to contribute to the assets of the company; and
(b) there may be proved against the assets of the body corporate the estimated value of
its liability to future calls as well as calls already made.
WINDING UP BY
COURT
CASES IN WHICH COMPANIES MAY BE WOUND UP BY COURT
305.
Circumstances in which company may be wound up by Court.-- A company may be wound up
by the Court--
(a) if the company has, by special resolution, resolved that the company be wound up by
the Court;
(b) if default is made in delivering the statutory report to the registrar or in holding
the statutory meeting or any two consecutive annual general meetings;
(c) if the company does not commence its business within a year from its incorporation, or
suspends its business for a whole year;
(d) if the number of members is reduced, in the case of private company, below two or, in
the case of any other company, below seven;
(e) if the company is unable to pay its debts;
(f) if the company is--
(i) conceived or brought forth for, or is or has been carrying on, unlawful or fraudulent
activities;
(ii) carrying on business not authorised by the memorandum;
(iii) conducting its business in a manner oppressive to any of its members or persons
concerned with the formation or promotion of the company or the minority shareholders;
(iv) run and managed by persons who fail to maintain proper and true accounts, or commit
fraud, misfeasance or malfeasance in relation to the company; or
(v) rampaged by persons who refuse to act according to the requirements of the memorandum
or articles or the provisions of this Ordinance or fail to carry out the directions or
decisions of the Court or the registrar or the Authority given in the exercise of powers
under this Ordinance;
(g) if, being a listed company, it ceases to be such company,
[.]
(h) if the Court is of opinion that it is just and equitable that the company
should be wound up. or
(i) if the company ceases to have a member.
Explanation I.-- The promotion or the carrying on of any scheme or business, except
the business carried on under the provisions of the Insurance Act, 1938 (IV of 1938),
howsoever described, whereby, in return for a deposit or contribution, whether
periodically or otherwise, of a sum of money in cash or by means of coupons, certificates,
tickets or other documents, payment, at future date or dates of money or grant of
property, right or benefit, directly or indirectly, and whether with or without any other
right or benefit, determined by chance or lottery or any other like manner, is assured or
promised shall be deemed to be an unlawful activity.
Explanation II.-- "Minority, shareholders" means shareholders together
holding not less than twenty per cent of the equity share capital of the company.
306. Company when deemed unable to pay its debts.-- (1) A
company shall be deemed to be unable to pay its debts--
(a) if a creditor, by assignment or other wise, to whom the company is indebted in a sum
exceeding one per cent of its paid-up capital or fifty thousand rupees, whichever is less,
than due, has served on the company, by causing the same to be delivered by registered
post or otherwise, at its registered office, a demand under his hand requiring the company
to pay the sum so due and the company has for thirty days thereafter neglected to pay the
sum, or to secure or compound for it to the reasonable satisfaction of the creditor; or
(b) if execution or other process issued on a decree or order of any Court or any other
competent authority in favour of a creditor of the company is returned unsatisfied in
whole or in part; or
(c) if it is proved to the satisfaction of the Court that the company is unable to pay its
debts, and in determining whether a company is unable to pay its debt, the Court shall
take into account the contingent and prospective liabilities of the company.
(2) The demand referred to in clause (a) of subsection (1) shall be deemed to have been
duly given under the hand of the creditor if it is signed by an agent or legal adviser
duly authorised on his behalf, or in the case of a firm if it is signed by such agent or
legal adviser or by any member of the firm on behalf of the firm.
307.
Transfer of proceedings to other Courts.-- where the High Court makes an order for
winding up a company under this Ordinance, it may, if it thinks fit, direct all subsequent
proceedings to be had in a Civil Court empowered by the Federal Government under
subsection (1) of section 7 or, with the consent of any other High Court, in such High
Court or in a Civil Court subordinate thereto; and thereupon, for the purposes of the
winding up of the company, such High Court or Civil Court, as the case may be, shall be
deemed to be the "Court" within the meaning of this Ordinance and shall have all
the powers and jurisdiction of the Court thereunder.
308. Withdrawal and transfer of winding up from one Court to
another.-- If, during the progress of a winding up in a Civil Court, it is made to
appeal to the High Court that the same could be more conveniently proceeded with in the
High Court or in any Civil Court empowered by the Federal Government under subsection (1)
of section 7, the High Court may, as the case may require--
(a) withdraw the case and proceed with the winding up itself; or
(b) transfer the case to such Civil Court, and thereafter the winding up shall proceed in
such Civil Court.
309.
Provisions as to applications for winding up.-- An application to the Court for the
winding up of a company shall be by petition presented, subject to the provisions of this
section, either by the company, or by any creditor or creditors (including any contingent
or prospective creditor or creditors), or by any contributory or contributories, or by all
or any of the aforesaid parties, together or separately, or by the registrar, or by the
Authority or by a person authorised by the Authority in that behalf:
Provided that--
(a) a contributory shall not be entitled to present a petition for winding up a company
unless--
(i) either the number of members is reduced, in the case of a private company, below two,
or, in the case of any other company, below seven; or
(ii) the shares in respect of which he is a contributory or some of them either were
originally allotted to him or have been held by him, and registered in his name, for at
least six months during the eighteen months before the commencement of the winding up, or
have devolved on him through the death of a former holder;
(b) the registrar shall not be entitled to present a petition for the winding up of a
company unless the previous sanction of the Authority has been obtained to the
presentation of the petition:
Provided that no such sanction shall be given unless the company has first been afforded
an opportunity of making a representation and of being heard;
(c) the Authority or a person authorised by the Authority in that behalf shall not be
entitled to present a petition for the winding up of a company unless an investigation
into the affairs of the company has revealed that it was formed for any fraudulent or
unlawful purpose or that it is carrying on a business not authorised by its memorandum or
that its business is being conducted in a manner oppressive to any of its members or
persons concerned in the formation of the company or that its management has been guilty
of fraud, misfeasance or other misconduct towards the company or towards any of its
members; and such petition shall not be presented or authorised to be presented by the
Authority unless the company has been afforded an opportunity of making a representation
and of being heard;
(d) the Court shall not give a hearing to a petition for winding up a company by a
contingent or prospective creditor until such security for costs has been given as the
Court thinks reasonable and until a prima facie case for winding up has been established
to the satisfaction of the Court;
(e) the Court shall not give a hearing to a petition for winding up a company by the
company until the company has furnished with its petition, in the prescribed manner, the
particulars of its assets and liabilities and business operations and the suits or
proceedings pending against it.
310. Right to present winding up petition where company is being
wound up voluntarily or subject to Court’s supervision.-- (1) Where a company is
being wound up voluntarily or subject to the supervision of the Court, a petition for its
winding up by the Court may be presented by any person authorised to do so under section
309 and subject to the provisions of that section.
(2) The Court shall not make a winding up order on a petition presented to it under
sub-section (1) unless it is satisfied that the voluntary winding up or winding up subject
to the supervision of the Court cannot be continued with due regard to the interests of
the creditors or contributories or both.
311. Commencement of winding up by Court.-- A winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up.
POWERS OF COURT HEARING APPLICATION
312.
Hearing of winding up petition by the Court.-- A petition for winding up of a company
shall come up for regular hearing, be proceeded with and decided in the manner laid down
in section 9.
313. Court may grant injunction.-- The Court may, at any time
after presentation of the petition for winding up a company under this Ordinance, and
before making an order for its winding up, upon the application of the company itself or
of any its creditors or contributories, restrain further proceedings in any suit or
proceeding against the company, upon such terms as the Court thinks fit.
314. Powers of Court on hearing petition.-- (1) On hearing a
winding up petition the Court may dismiss it with or without costs, or adjourn the hearing
conditionally or unconditionally subject to the limitation imposed in section 9 or make
any interim order, or any order for winding up the company or any other order that it
deems just; but the Court shall not refuse to make a winding up order on the ground only
that the assets of the company have been mortgaged to an amount equal to or in excess of
those assets, or that the company has no assets.
(2) Where the petition is presented on the ground that it is just and equitable that the
company should be wound up, the Court may refuse to make an order of winding up, if it is
of opinion that some other remedy is available to the petitioners and that they are acting
unreasonably in seeking to have the company wound up instead of pursuing that other
remedy.
(3) Where the petition is presented on the ground of default in delivering the statutory
report or in holding the statutory meeting or any two consecutive annual general meetings,
the Court may, instead of making a winding up order, direct that the statutory report
shall be delivered or that a meeting shall be held, and order the costs to be paid by any
persons who, in the opinion of the Court, are responsible for the default.
(4) If, on hearing a petition, the Court is of opinion that, although the facts would
justify the making of a winding up order, the making of such order would unfairly
prejudice the members or the creditors, the Court may, instead of making an order for
winding up the company, make such order as it thinks fit in the circumstances for
regulations the conduct of the affairs of the company and bringing to an end the matters
complained of, including an order for a change in the management of the company.
(5) Where the Court makes an order for the winding up of a company, it shall forthwith
cause intimation thereof to be sent to the official liquidator appointed by it and to the
registrar.
315. Copy of winding up order to be filed with registrar.-- (1)
Within fifteen days from the date of the making of the winding up order, the petitioner in
the winding up proceedings and the company shall file a certified copy of the order with
the registrar.
(2) If default is made in complying with the foregoing provision, the petitioner or, as
the case may require, the company, and every. officer of the company who is in default,
shall be punishable with fine which may extend to one hundred rupees for each day during
which the default continues.
(3) On the filing of a certified copy of a winding up order, the registrar shall forthwith
make a minute thereof in his books relating to the company, and shall simultaneously
notify in the official Gazette that such an order has been made.
(4) Such order shall be deemed to be notice of discharge to the servants of the company,
except when the business of the company is continued.
316. Suits stayed on winding up order.-- (1) When a winding up
order has been made or a provisional managers has been appointed, no suit or other legal
proceeding shall be proceeded with or commenced against the company except by leave of the
Court, and subject to such terms as the Court may impose.
(2) The Court which is winding up the company shall, notwithstanding anything contained in
any other law for the time being in force, have jurisdiction to entertain, or dispose of,
any suit or proceeding by or against the company.
(3) Any suit or proceeding by or against the company which is pending in any Court other
than that in which the winding up of the company is proceeding may, notwithstanding
anything contained in any other law for the time being in force, be transferred to and
disposed of by the Court.
317. Court may require expeditious disposal of suits, etc.-- (l)
Notwithstanding anything contained in any other law--
(a) if any suit or proceedings, including an appeal, by or against the company which is
allowed to be proceeded with in any Court other than the Court in which winding up of the
company is proceeding, the Court may issue directions to that other Court if that court is
subordinate to it and, in any other case, make a request to that other Court for
expeditious disposal of the pending suit or proceeding by or against the company; and
(b) if any proceedings, including proceedings for assessment or recovery of any tax, duty
or levies or appeal or review petition against any order is pending or is likely to be
instituted, before any officer, tribunal, authority or other body, the Court may issue
directions to that officer, tribunal, authority or other body for expeditious action and
disposal of the said proceedings.
(2) Upon issue of a direction or making of a request as aforesaid, the Court, officer,
tribunal, authority or body to whom the same is addressed shall, notwithstanding anything
contained in any other law proceed to dispose of the said suit or other proceedings
expeditiously by according it special priority and adopting such measures as may be
necessary in this behalf, and shall inform the Court issuing the direction or making the
request of the action taken.
318. Effect of winding up order.-- An order for winding up a
company shall operate in favour of all the creditors and of all the contributories of the
company as if made on the joint petition of a creditor and of a contributory.
319. Power of Court to stay winding up, etc.-- (1) The Court may
at any time after an order for winding up, on the application of any creditor or
contributory or of the registrar or the Authority or a person authorised by it, and on
proof to the satisfaction of the Court that all proceedings in relation to the winding up
ought to be stayed, withdrawn, cancelled or revoked, make an order accordingly, on such
terms and conditions as the Court thinks fit.
(2) On any application under subsection (1), the Court may, before making an order,
require the official liquidator to furnish to the Court a report with respect to any facts
or matters which are in his opinion relevant to the application.
(3) A copy of every order made under subsection (1) shall forthwith be forwarded by the
Court to the registrar, who shall make a minute of the order in his books relating to the
company.
320. Court to have regard to wishes of creditors or
contributories.-- The Court shall, as to all matters relating to a winding up, have
regard to the wishes of the creditors or contributories as proved to it by any sufficient
evidence.
321.
Appointment of official liquidator.-- (1) For the purposes of this Ordinance, so far
as it relates to the winding up of companies by the Court, the Court shall maintain, from
amongst persons recommended by the Authority, a panel of persons from whom it shall
appoint a provisional manager or official liquidator of a company ordered to be wound up
by the Court.
(2) In the order winding up a company the Court shall appoint one or more of the
persons on the panel maintained as aforesaid to act as official liquidator of
the company and thereupon such person or persons shall, unless, within three
days of the communication of the order, he or they informs or inform the Court
of his or their inability, to act as such, forthwith start performing the duties
and functions of official liquidator in relation to that company and continue to
perform such duties and functions till the conclusion of winding up proceedings:
Provided that no person shall be appointed as liquidator of
more than three companies at one point of time.
(3) If more persons than one are appointed to the office of official liquidator, the Court
shall declare whether any act by this Ordinance required or authorised to be done by the
official liquidator is to be done by all or any one or more of such persons.
(4) The Court may determine whether any, and what, security is to be given by any official
liquidator on his appointment.
(5) Any vacancy in the office of an official liquidator shall be filled up by the Court by
the appointment of another person on the panel referred to in subsection (1).
(6) Notwithstanding anything contained in subsection (1) or subsection (5), the Court may,
if it considers it necessary so to do for reasons to be recorded, or on the application of
creditors to whom mounts not less than sixty per cent of the issued share capital of the
company being wound up are due, after notice to the registrar, appoint a person (other
than the official receiver) whose name does not appear on the panel maintained for the
purpose, to be the official liquidator.
322. Registration, removal, filling up vacancies, etc., of official
liquidator.-- (1) An official liquidator shall not resign or quit his office as
official liquidator before conclusion of the winding up proceedings except for reasons of
personal disability to the satisfaction of the Court.
Provided that an official liquidator may at any time be removed by the Court for reasons
to be recorded
(2) Any vacancy in the office of an official liquidator shall be filled up by the Court by
the appointment of another person from the panel maintained under section 321; and, until
the person so appointed in his stead takes charge, the outgoing official liquidator shall,
unless the Court directs otherwise, continue to act as the official liquidator.
323. Remuneration of official liquidator.-- (1) An official
liquidator, not being a salaried officer of Government or of the Court, shall be entitled
to such remuneration by way of percentage of the amount realised by him by disposal of
assets or otherwise as may be fixed by the Court having regard to the amount and nature of
the work actually done and subject to such limits as may be prescribed:
Provided that different percentage rates may be fixed for different types of assets.
(2) In addition to the remuneration payable under subsection (1), the Court may permit
payment of a monthly allowance to the official liquidator for meeting the expenses of the
winding up for a period not exceeding twelve months from the date of the winding up order.
(3) The remuneration fixed as aforesaid shall not be enhanced subsequently but may be
reduced by the Court at any time.
(4) If the official liquidator resigns, is removed from office or otherwise ceases to hold
office before conclusion of the winding up proceedings, he shall not be entitled to any
remuneration and the remuneration already received by him, if any, shall be refunded by
him to the company.
(5) No remuneration shall be payable to an official liquidator
who fails to complete the winding up proceedings within the prescribed period.
324. Style of official liquidator.-- An official liquidator
shall be described by the style of the official liquidator of the particular company in
respect of which he acts, and not by his individual name.
325. Appointment and powers of provisional manager.-- (1) At any
time after the presentation of winding up petition and before the making of a winding up
order, the Court may appoint a person eligible for appointment as official liquidator
under section 321 to be provisional manager.
(2) Before appointing a provisional manager, the Court shall give notice to the company
and afford to it a reasonable opportunity to make its representations, if any, unless, for
special reasons to be recorded, the Court thinks fit to dispense with such notice.
(3) Where a provisional manager is appointed by the Court, the Court may limit and
restrict his powers by the order appointing him or by a subsequent order; but otherwise he
shall have the same powers as a liquidator.
(4) Unless the Court directs otherwise the provisional manager shall cease to hold office
as provisional manager on the winding up order being made.
326. General provisions as to liquidators.-- (1) The official
liquidator shall conduct the proceedings in winding up the company and perform such duties
in reference thereto as the Court may impose.
(2) The acts of a liquidator shall be valid, notwithstanding any defect that may
afterwards be discovered in his appointment or qualification:
Provided that nothing in this subsection shall be deemed to give validity to acts done by
a liquidator after his appointment has been shown to be invalid.
(3) The winding up proceedings shall be completed by the official liquidator within a
period of one year from the date of commencement of winding up:
Provided that the Court may, on the application of the official liquidator, grant
extension by one month at any one time but the extensions so granted shall not exceed a
period of six months in all and shall be allowed only for the reason that any proceedings
for or against the company are pending in a Court superior to the Court in which
liquidation proceedings are in progress.
(4) If an official liquidator is convicted of misfeasance, or breach of duty or other
lapse or default in relation to winding up proceedings of a company, he shall cease to be
the official liquidator of the company and shall also became disqualified, for a period of
five years from such conviction, from being the liquidator or to hold any other office
including that of a director, in any company and if he already holds any such office he
shall forthwith be deemed to have ceased to hold such office.
(5) The registrar and the Authority shall take cognizance of any lapse, delay or other
irregularity on the part of the official liquidator and may, without prejudice to any
other action under the law, report the same to the Court.
327. Receiver not to be appointed of assets with liquidator.-- A
receiver shall not be appointed of assets in the hands of a liquidator except by, or with
the leave of, the Court.
328. Statement of affairs to be made to official liquidator.--
(1) Where the Court has made a winding up order or appointed an official liquidator or
provisional manager, there shall be made out and submitted to the official liquidator or
provisional manager a statement as to the affairs of the company in the prescribed form,
verified by an affidavit, and containing the following particulars, namely.
(a) the assets of the company, stating separately the cash balance in hand and at the
bank, if any, and the negotiable securities, if any, held by the company;
(b) the debts and liabilities of the company;
(c) the names. residences and occupations of the creditors of the company, stating
separately the amount of secured debts and unsecured debts, and, in the case of secured
debts, particulars of the securities given, their value and the dates when they were
given;
(d) the debts due to the company and the names, residences and occupations of the persons
from whom they are due and the amount likely to be realised therefrom:
(e) where any property of the company is not in its custody or possession, the place where
and the person in whose custody or possession such property is;
(f) full address of the places where the business of the company was conducted during the
six months preceding the relevant date and the names and particulars of the persons
incharge of the same;
(g) details of any pending suits or proceedings in which the company is a party, and
(h) such other particulars as may be prescribed or as the Court may order or the official
liquidator or provisional manager may require in writing, including any information
relating to secret reserves and personal assets of directors.
(2) The statement shall be submitted and verified by persons who are at the relevant date
the directors and by the persons who are at that date the chief executive and secretary,
of the company. or by such of the persons hereafter in this subsection mentioned as the
official liquidator or provisional manager, subject to the direction of the Court, may
require to submit and verify- the statement, that is to say, persons--
(a) who are or have been directors, chief executives or officers of the company within one
year from the relevant date;
(b) who have taken part in the formation of the company at any time within one year before
the relevant date;
(c) who are in the employment of the company or have been in the employment of the company
within the said year, and are in the opinion of the official liquidator or provisional
manager capable of giving the information required;
(d) who are or have been within the said year of officers of, or in the employment of, a
company which is, or within the said year was, an officer of the company to which the
statement relates.
(3) The statement shall be submitted within twenty-one days from the relevant date, or
within such extended time not exceeding forty-five days from that date as the official
liquidator or provisional manager or the Court may, for special reasons, appoint.
(4) Any person making, or concurring in making, the statement and affidavit required by
this section shall be allowed, and shall be paid by the official liquidator or provisional
manager, as the case may be, out of the assets of the company, such costs and expenses
incurred in and about the preparation and making of the statement and affidavit as the
official liquidator or provisional manager may consider reasonable, subject to an appeal
to the Court.
(5) If any person, without reasonable excuse, make default in complying with the
requirements of this section, he shall be liable to a fine not exceeding five hundred
rupees for every. day during which the default continues.
(6) Without prejudice to the operation of any provisions imposing penalties in-respect of
any such default as aforesaid, the Court which makes the winding up order or appoints a
provisional manager may take cognizance of an offence under subsection (5) and try the
offence itself in accordance with the procedure laid down in the Code of Criminal
Procedure, 1898 (Act V of 1898), for the trial of cases by Magistrates and further direct
the persons concerned to comply with the provisions of this section within such time as
may be specified by it.
(7) Any person stating himself in writing to be a creditor or contributory. of the company
shall be entitled, by himself or by his agent, at all reasonable times, on payment of the
prescribed fee, to inspect the statement submitted in pursuance of this section, and to a
copy thereof or extract therefrom.
(8) Any person untruthfully so stating himself to be a creditor or contributory shall be
guilty of an offence under section 182 of the Pakistan Penal Code, 1860 (Act XLV of 1860),
and shall on the application of the official liquidator or provisional manager, be
punishable accordingly.
(9) In this section, the expression "the relevant date" means, in a case where a
provisional manager is appointed, the date of his appointment, and, in a case where no
such appointment is made, the date of the winding up order.
329. Report by official liquidator.-- (1) In a case where a winding
up order is made, the official liquidator shall, as soon as practicable after receipt of
the statement to be submitted under section 328 and not later than thirty days, or such
further period not exceeding thirty days as the Court may allow, from the date of the
winding up order submit a preliminary report to the Court--
(a) as to the amount of capital issued, subscribed, and paid up, and the estimated amount
of assets and liabilities, giving separately, under the heading of assets, particulars
of,--
(i) cash, bank balances and negotiable securities;
(ii) debts due from contributories;
(iii) debts due to the company and securities, if any, available in respect thereof;
(iv) movable and immovable properties belonging to the company;
(v) unpaid calls; and
(b) if the company has failed, as to the causes of the failure, and whether in his opinion
further inquiry is desirable as to any matter relating to the promotion, formation, or
failure of the company, or the conduct of its business.
(2) The official liquidator may also, if he thinks fit, make a further report, or further
reports, stating the manner in which the company was promoted or formed and whether in his
opinion any fraud has been committed by any person in its promotion or formation, or by
any director or other officer of the company in relation to the company since its
formation, and any other matter which, in his opinion, it is desirable to bring to the
notice of the Court.
(3) If the official liquidator states in any such report or further report that in his
opinion a fraud has been committed as aforesaid, the Court shall have the further power
provided in section 351, 352 and 353.
(4) A certified copy of the reports aforesaid shall also be sent to the registrar
simultaneously with their submission to the Court.
330. Custody of company’s property.-- (1) The provisional
manager or official liquidator, as the case may be, shall take into his custody or under
his control, all the books and papers, property, effects and actionable claims belonging
to or to which the company is or appears to be entitled; and all persons who are or have
been directors, chief executives, managers, officers, servants, bankers, auditors or
agents of the company and who may be having in their knowledge, custody, control or
charge, directly or under them any such books or papers, property effects and actionable
claims, shall forthwith report and hand over or cause to be handed over possession to the
liquidator of all such items and furnish to the liquidator such information and
explanations as he may require and any default or failure on their part shall be
punishable with imprisonment of either description which may extend to one year and with
fine which may extent to ten thousand rupees and the Court may direct the books or papers,
property and effects to be delivered to the liquidator in case of default or failure, and
in the event of non-compliance with the directive to order the person in default to pay
further amount by way of compensation equal to the value of the property as the Court may
determine.
(2) For the purpose of enabling the provisional manager or the official liquidator, as the
case may be to take into his custody or under his control any property, effects,
actionable claims or books of account or other documents to which the company is or
appears to be entitled, the provisional manager or the official liquidator, as the case
may be, may by writing request the District Magistrate within whose jurisdiction such
property, effects, or actionable claims or books of account or other documents may be
found to take possession thereof, and the District Magistrate shall thereupon, after such
notice as he may think fit to give to any party, take possession of such property,
effects, actionable claims, books of account or other documents and deliver possession
thereof to the provisional manager or the official liquidator, as the case may be.
(3) For the purpose of securing compliance with the provisions of subsection (2), the
District Magistrate may take or cause to be taken such steps, and use or cause to be used
such force, as may in his opinion be necessary.
(4) All the property and effects of the company shall be deemed to be in the custody of
the Court as from the date of the order for the winding up of the company.
331. Committee of inspection in compulsory winding up.-- (1)
When a winding up order has been made by the Court, the liquidator shall within thirty
days summon separate meetings of the creditors and contributories of the company for the
purpose of determining whether or not an application is to be made to the Court for the
appointment of a committee of inspection to act with the liquidator, and who are to be the
members of the committee if appointed.
Provided that, where the winding up order has been made on the ground that the company is
tumble, to pay its debts, it shall not be necessary for the liquidator to summon a meeting
of the contributories.
(2) The Court may make any appointment and order required to give effect to any such
determination, and if there is a difference between the determinations of the meetings of
the creditors and contributories in respect of the matters aforesaid the Court shall
decide the difference and make such order thereon as the Court may think fit.
332. Constitution and proceedings of committee of inspection.--
(1) A committee of inspection appointed under section 331 shall consist of creditors and
contributories of the company or persons holding general powers of attorney from creditors
or contributories in such proportions as may be agreed on by the meetings of creditors and
contributories or as, in case of difference, may be determined by the Court:
Provided that, where a winding up order has been made on the ground that a company is
unable to pay its debts, the committee shall consist of creditors or persons holding
general powers of attorney from creditors.
(2) The committee shall meet at such times as it may from time to time appoint, and,
failing such appointment, at least once a month, and the liquidator or any member of the
committee may also call a meeting of the committee as and when he thinks necessary.
(3) The committee may act by a majority of its members present at a meeting but shall not
act unless a majority of the members of the committee are present.
(4) A member of the committee may resign by notice in writing signed by him and delivered
to the liquidator.
(5) If a member of the committee becomes bankrupt or compounds or arranges with his
creditors or is absent from five consecutive meetings of the committee without the leave
of those members who together with himself represent the creditors or contributories, as
the case may be, his office shall thereupon become vacant.
(6) A member of the committee may be removed by an ordinary resolution at a meeting of
creditors, if he represents creditors, or at a meeting of contributories, if he represents
contributories, of which seven days notice has been given, stating the object of the
meeting.
(7) On a vacancy occurring in the committee the official liquidator shall forthwith summon
a meeting of creditors or of contributories, as the case may require, to fill the vacancy,
and the meeting may, by resolution, reappoint the same or appoint another creditor or
contributory to fill the vacancy:
Provided that, if the official liquidator, having regard to the position in the winding
up, is of the opinion that it is unnecessary for the vacancy to be filled, he may apply to
the Court and the Court may make an order that the vacancy shall not be filled, or shall
not be filled except in such circumstances as may be specified in the order.
(8) The continuing members of the committee, if not less than two, may act notwithstanding
any vacancy in the committee.
333. Powers of official liquidator.-- (1) The liquidator in a
winding up by the Court shall have power, with the sanction either of the Court or of the
committee of inspection--
(a) to institute or defend any suit, action, prosecution or other legal proceeding, civil
or criminal, in the name and on behalf of the company;
(b) to carry on the business of the company so far as may be necessary for the beneficial
winding up thereof;
(c) to pay any classes of creditors in full;
(d) to make any compromise or arrangement with creditors or persons claiming to be
creditors, or having or alleging themselves to have any claim, present or future, certain
or contingent, ascertained or sounding only in damages against the company, or whereby the
company may be rendered liable;
(e) to compromise all calls and liabilities to calls, debts and liabilities capable of
resulting in debts, and all claims, present or future, certain or contingent, ascertained
or sounding only in damages, subsisting or supposed to subsist between the company and a
contributory or alleged contributory or other debtor or person apprehending liability to
the company, and all questions in any way relating to or affecting the assets or the
winding up of the company, on such terms as may be agreed, and take any security for the
discharge of any such calls, debt, liability or claim and give a complete discharge in
respect thereof;
(f) to sell the movable and immovable property and things in action of the company by
public auction or private contract, with power to transfer the whole thereof to any person
or company or to sell the same in parcels.
(2) Subject to any general or special direction of the Court, or of the committee of
inspection, the liquidator in winding up by the Court shall have power--
(a) to do all acts and to execute, in the name and on behalf of the company, all deeds,
receipts and other documents, and for that purpose to use, when necessary, the company's
seal;
(b) to prove, rank and claim in the bankruptcy, insolvency or sequestration of any
contributory for any balance against his estate, and to receive dividends in the
bankruptcy, insolvency or sequestration in respect of that balance, as a separate debt due
from the bankrupt or insolvent, and ratably with the other separate creditors;
(c) to draw, accept, make and endorse any bill of exchange or promissory note in the name
and on behalf of the company, with the same effect with respect to the liability of the
company as if the bill or note had been drawn, accepted, made or endorsed by or on behalf
of the company in the course of its business;
(d) to raise on the security, of the assets of the company any money requisite;
(e) to take out in his official name letters of administration to any deceased
contributory, and to do in his official name any other act necessary, for obtaining
payment of any money due from a contributory or his estate which cannot be conveniently
done in the name of the company; and in all such cases the money due shall, for the
purposes of enabling the liquidator to take out the letters of administration or recover
the money, be deemed to be due to the liquidator himself;
(f) to appoint an agent to do any business which the liquidator is unable to do himself;
and
(g) to do all such other acts and things. as may be necessary for winding up the affairs
of the company and distributing its assets.
(3) The exercise by the liquidator in a winding up by the Court of the powers conferred by
this section shall be subject to the control of the Court, and any creditor or
contributory or the registrar may apply to the Court with respect to any exercise or
proposed exercise of any of the said powers.
334. Discretion of official liquidator.-- The Court may provide
by any order that the official liquidator may, where there is no committee of inspection,
exercise any of the powers mentioned in paragraph (a) or paragraph (b) of subsection (1)
of section 333 without the sanction or intervention of the Court.
335. Provision for assistance to official liquidator.-- The
official liquidator may, with the sanction of the committee of inspection or, where there
is no committee of inspection, with the sanction of the Court, appoint a person entitled
to appear before the Court or such person as may be prescribed to assist him in the
performance of his duties:
Provided that, where the official liquidator is an advocate, he shall not appoint his
partner unless the latter consents to act without remuneration.
336. Liquidator to keep books containing proceedings of meetings,
etc.-- The official liquidator of a company which is being wound up by the Court shall
keep, in the manner prescribed, proper books and papers in which he shall cause to be made
entries or minutes of proceedings at meetings and of such other matters as may be
prescribed, and any creditor or contributory may, subject to the control of the Court,
personally or by his agent inspect any such books.
337. Liquidator’s account.-- (1) Every official liquidator
shall, at such times as may be prescribed but no less than twice in each year during his
tenure of office, present to the Court an account of his receipts and payments and
dealings as liquidator, together with such further information as may be prescribed.
(2) The account and information as aforesaid shall be in the prescribed form, shall be
made in duplicate, and shall be verified by a declaration in the prescribed form.
(3) The Court shall cause the account and the books and papers of the official liquidator
to be audited in such manner as it thinks fit and for the purpose of the audit the
liquidator shall furnish the Court with such books and papers and information as the Court
may require, and the Court may at any time require the production of and inspect or cause
to be inspected any books or papers kept by the liquidator.
(4) When the account and the books and papers have been audited, one copy thereof
alongwith the auditor's report shall be filed and kept by the Court, and the other copy
alongwith the auditor's report shall be delivered to the registrar for fling; and each
copy shall. be open to the inspection of any person on payment of prescribed fee.
(5) The official liquidator shall cause a copy of the account when audited or a summary
thereof to be sent by post to every creditor and contributory.
(6) The Federal Government may by notification in the official Gazette, require that the
accounts and information referred to in subsection (I) shall be furnished' to an officer
to be designated by it for the purpose and that such officer shall cause the accounts to
be audited; and, upon the publication of such notification, reference to Court in the
preceding provisions of this section shall be construed as reference to such officer.
338. Exercise and control of liquidator’s powers.-- (1)
Subject to the provisions of this Ordinance, the official liquidator of a company which is
being wound up by the Court shall, in the administration of the assets of the company and
in the distribution thereof among its creditors, have regard to any directions that may be
given by resolution of the creditors or contributories at any general meeting or by the
committee of inspection, and any directions given by the creditors or contributories at
any general meeting shall in case of conflict be deemed to override any directions given
by the committee of inspection.
(2) The official liquidator may summon general meetings of the creditors or contributories
for the purpose of ascertaining their wishes, and it shall be his duty to summon meetings
at such times as the, creators or contributories, by resolution, may direct, or whenever
requested in writing to do so by one-tenth in value of the creditors or contributories, as
the case may be.
(3) The official liquidator may apply to the Court for directions in relation to any
particular matter arising in the winding up.
(4) Subject to the provisions of this Ordinance, the official liquidator shall use his own
discretion in the administration of the assets of the company and in the distribution
thereof among the creditors.
(5) If any person is aggrieved by any act or decision of official liquidator, that person
may apply to the Court, and the Court may confirm, reverse or modify the act or decision
complained of, and make such order as it thinks just in the circumstances.
339.
Settlement of list of contributories and application of assets.-- (1) A soon as may be
after making a winding up order, the Court shall settle a list of contributories, with
power to rectify. the register of members in all cases where rectification is required in
pursuance of this Ordinance and shall cause the assets of the company to be collected and
applied in discharge of its liabilities:
Provided that, where it appears to the Court that it will not be necessary to make calls
on or adjust the rights of contributories, the Court may dispense with the settlement of a
list of contributories.
(2) In settling the list of contributories, the Court shall distinguish between persons
who are contributories in their own right and persons who are contributories as being
representatives of, or liable for the debts of, others.
340. Power to require delivery of property.-- Without prejudice
to the obligation imposed under any other provisions, the Court may, at any time after
making a winding up order, require any contributory for the time being on the list of
contributories and any trustee, receiver, banker, agent, officer or employee or past
officer or employee or auditor of the company to pay, deliver, convey, surrender or
transfer forthwith, or within such time as the Court directs, to the official liquidator
any money, property or books and papers including documents in his hands to which the
company is prima facie entitled.
341. Power to order payment of debts by contributory.-- (1) The
Court may, at any time after making a winding up order, make an order on any contributory
for the time being settled on the list of contributories to pay, in manner directed by the
order, any money due from him or from the estate of the person whom he represents to the
company, exclusive of any money payable by him or the estate by virtue of any call in
pursuance of this Ordinance.
(2) The Court in making such an order may--
(a) in the case of an unlimited company, allow to the contributory, by way of set-off, any
money due to him or to the estate which he represents from the company on any independent
dealing or contract with the company, but not any money due to him as a member of the
company in respect of any dividend or profit; and
(b) in the case of a limited company, make to any director whose liability is unlimited or
to his estate the like allowance.
(3) In the case of any company, whether limited or unlimited, when all the creditors are
paid in full, any money due on any account whatever to a contributory, from the company
may be allowed to him by way of set-off against any subsequent call.
342. Power of Court to make calls.-- (1) The Court may; at any
time after making a winding up order, and either before or after it has ascertained the
sufficiency of the assets of the company, make calls on and order payment thereof by all
or any the of the contributories for the time being settled on the list of the
contributories to the extent of their liability, for payment of any money which the Court
considers necessary, to satisfy., the debts and liabilities of the company, and the costs,
charges and expenses of winding up, and for the adjustment of the rights of the
contributories among themselves.
(2) In making the call the Court may take into consideration the probability that some of
the contributories may partly or wholly fail to pay the call.
343. Power to order payment into bank.-- (1) The Court may order
any contributory, purchaser or other person from whom any money is due to the company to
pay the same into the account of the official liquidator in a scheduled bank instead of to
the official liquidator, and any such order may be enforced in the same manner as if it
had directed payment to the official liquidator.
(2) Information about the amount deposited shall be sent by the person paying it to the
official liquidator within three days of the date of payment.
344. Regulation of account with Court.-- All moneys, bills, hundis,
notes and other securities paid and delivered into the scheduled bank where the official
liquidator of the company may have his account, in the event of a company being wound up
by the Court, shall be subject in all respects to the orders of the Court.
345. Order on contributory conclusive evidence.-- (1) An order
made by the Court on a contributory shall, subject to any right of appeal, be conclusive
evidence that the money, if any, thereby appearing to be due or ordered to be paid is due.
(2) All other pertinent matters stated in the order shall be taken to be truly stated as
against all persons, and in all proceedings whatsoever.
346. Power to exclude creditors not proving in time.-- The Court
may fix a time or times within which creditors are to prove their debts or claims, or to
be excluded from the benefit of any distribution made before those debts are proved.
347. Adjustment of rights of contributories.-- The Court shall
adjust the rights of the contributories among themselves, and distribute any surplus among
the persons entitled thereto.
348. Power to order costs.-- The Court may, in the event of the
assets being insufficient to satisfy the liabilities, make an order as to the payment out
of the assets of the costs, charges and expenses incurred in the winding up in such order
or priority as the Court thinks just.
349. Distribution by official liquidator.-- Subject to any
directions given by the Court, the official liquidator shall, within thirty days of the
coming into his hands of funds sufficient to distribute among the creditors or
contributories after providing for expenses of the winding up or for other preferential
payrnents as provided in this Ordinance, distribute in accordance with the provisions of
this Ordinance:
Provided that such 'portion of the funds as may be required for meeting any claim against
the company which may be sub-judice or subject-matter of adjudication or assessment shall
not be distributed till the claim is finally settled:
Provided further that any amounts retained as aforesaid shall be invested by the official
liquidator in Khas Deposit Certificates and the same shall be deposited by him with the
Court and the distribution thereof shall be made by him after the pending claims are
settled.
350. Dissolution of company.-- (1) When the affairs of a company
have been completely wound up, .or when the Court is of the opinion that the official
liquidator cannot proceed with the winding up of the company for want of funds and assets
or any other reason whatsoever and it is just and reasonable in the circumstances of the
case that an order of dissolution of the company be made, the Court shall make an order
that the company be dissolved from the date of the order, and the company shall be
dissolved accordingly:
Provided that such dissolution of the company shall not extinguish any right of, or debt
due to, the company against or from any person.
(2) A copy of the order shall, within fifteen days of the making thereof, be forwarded by
the official liquidator to the registrar, who shall make in his books a minute of the
dissolution of the company.
(3) If the official liquidator makes default in complying with the requirements of this
section, he shall be liable to a fine not exceeding one hundred rupees for every day
during which he is in default.
351. Power to summon persons suspected of having property of company.--
(1) The Court may, at any time after the appointment of a provisional manager or the
making of winding up order, summon before it any officer of the company or person known or
suspected to have in his possession any property or books or papers of the company, or
known or suspected to be indebted to the company, or any person whom the Court deems
capable of giving information concerning the promotion, formation, trade, dealings, books
of papers, affairs of property of the company.
(2) The Court may examine a person summoned under subsection (1) on oath concerning the
matters aforesaid, either by word of mouth or on written interrogatories, and may reduce
his answers to writing and require him to sign them.
(3) The Court may require a person summoned under subsection (1) to produce any books and
papers in his custody or power relating to the company, but, where he claims any lien on
books or papers produced by him, the production shall be without prejudice to that lien,
and the Court shall have jurisdiction in the winding up to determine all questions
relating to that lien.
(4) If any person so summoned, after being paid or tendered a reasonable sum for his
expenses, fails to come before the Court at the time appointed, not having a lawful
impediment made known to the Court at the time of its sitting and allowed by it, the Court
may cause him to be apprehended and brought before the Court for examination.
(5) If, on his examination, any officer or person so summoned admits that he is indebted
to the company, the Court may order him to pay to the provisional manager or, as the case
may be, the liquidator, at such time and in such manner as the Court may direct, the
amount in which he is indebted, or any part thereof, either in full discharge of the whole
amount or not, as the Court thinks fit, with or without costs of the examination.
(6) If, on his examination, any such officer or person admits that he has in his
possession any property belonging to the company, the Court may order him to deliver to
the provisional manager or, as the case may be, the liquidator, that property or any part
thereof, at such time, in such manner and on such terms as the Court may direct.
(7) Orders made under subsections (5) and (6) shall be executed in the same manner as
decrees for the payment of money or for the delivery of property under the Code of Civil
Procedure, 1908 (Act V of 1908), respectively.
(8) Any person making any payment or delivery in pursuance of an order made under
subsection (5) or subsection (6) shall by such payment or deliver be, unless otherwise
directed by such order, discharged from all liability whatsoever in respect of such debt
or property.
352. Power to order public examination of promoters, directors,
etc.-- (1) When an order has been made for winding up a company by the Court, and the
official liquidator has made a report to the Court stating that in his opinion a fraud or
other actionable irregularity has been committed by any person in the promotion or
formation of the company or by any director or other officer of the company in relation to
the company since its formation, the Court may, after consideration of the report, direct
that such person, director or other officer shall attend before the Court on a day
appointed by the Court for that purpose, and be publicly examined as to the promotion or
formation or the conduct of the business of the company, or as to his conduct and dealings
as director, manager or other officer thereof.
(2) The official liquidator shall take part in the examination, and for that purpose may,
if specially authorised by the Court in that behalf, employ such legal assistance as may
be sanctioned by the Court.
(3) Any creditor or contributor may also take part in the examination either personally or
by any person entitled to appear before the Court.
(4) The Court may put such questions to the person examined as the Court thinks fit.
(5) The person examined shall be examined on oath, and shall answer all such questions as
the Court may put or allow to be put to him.
(6) A person ordered to be examined under this section--
(a) shall, before his examination, be furnished at his own cost with a copy of the
official liquidator's report; and
(b) may at his own cost employ any person entitled to appear before the Court, who shall
be at liberty to put to him such questions as the Court may deem just for the purpose of
enabling him to explain or qualify any answer given by him:
Provided that if he is, in the opinion of the Court, exculpated from any charges made or
suggested against him, the Court may allow him such costs as in its discretion it may
think fit.
(7) If any such person applies to the Court to be exculpated from any charges made or
suggested against him, it shall be the duty of the official liquidator to appear on the
heating of the application and call the attention of the Court to any matters which appear
to the official liquidator to be relevant, and if the Court, after hearing any evidence
given or witnesses called by the official liquidator, grants the application, the Court
may allow the applicant such costs as it may think fit.
(8) Notes of the examination shall be taken down in writing and shall be read over to or
by, and signed by, the person examined, and may thereafter be used in evidence against him
and shall be open to the inspection of any creditor or contributory at all reasonable
times.
(9) The Court may, if it thinks fit, adjourn the examination from time to time.
(10) An examination under this section may, if the Court so directs, and subject to any
rules in this behalf, be held before any officer of the Court, being an Official Referee,
Master Registrar, Additional Registrar or Deputy Registrar.
(11) The powers of the Court under this section as to the conduct of the examination, but
not as to costs, may be exercised by the person before whom the examination is held by
virtue of a direction under subsection (10).
353. Power to arrest absconding contributory.-- The Court, at any
time either before or after making a winding up order, on proof of probable cause for
believing that a contributory is about to quit Pakistan or otherwise to abscond, or to
remove or conceal any of his property, for the purpose of evading payment of calls or of
avoiding examination respecting the affairs of the company, may cause the contributory to
be arrested and his books and papers and movable property to be seized, and him and them
to be safely kept until such time as the Court may order.
354. Saving of other proceedings.-- Any powers conferred on the
Court by this Ordinance shall be in addition to, and not in derogation of, any existing
power of instituting proceedings against any contributory or debtor of the company, or the
estate of any contributory or debtor, for the recovery of any call or other sums.
355. Power
to enforce orders.-- All orders made by a Court under this Ordinance may be enforced
in the same manner in which decrees of such Court made in any suit may be enforced.
356. Order made by any Court to be enforced by other Courts.--
Any order made by a Court for, or in the course of, winding up of a company shall be
enforceable in any place in Pakistan, and in the same manner in all respects as if such
order had been made by a Court having jurisdiction in respect of that company or a Court
to whom the Court refers the order for enforcement.
357. Mode of dealing with orders to be enforced by other Courts.--
Where any order made by one Court is to be enforced by another Court, a certified copy of
the order so made shall be produced to the proper officer of the Court required to enforce
the same, and the production of such certified copy shall be sufficient evidence of such
order having been made; and thereupon the last-mentioned Court shall take the requisite
steps in the matter for enforcing the order, in the same manner as if it were the order of
the Court enforcing the same.
VOLUNTARY WINDING
UP
RESOLUTION FOR, AND COMMENCEMENT OF, VOLUNTARY WINDING UP
CONSEQUENCES OF VOLUNTARY WINDING UP
360.
Effect of voluntary winding up on status of company.-- In the case of voluntary
winding up, the company shall, from the commencement of the winding up, cease to carry on
its business. except so far as may be required for the beneficial winding up thereof:
Provided that the corporate state and corporate powers of the company shall,
notwithstanding anything to the contrary in its articles, continue until it is dissolved.
361. Notice of resolution to wind up voluntarily.-- (1) Notice
of any resolution for winding up a company voluntarily shall be given by the company
within ten days of the passing of the same by advertisement in the official Gazette, and
also in a newspaper circulating in the Province where the registered office of the company
is situate and, in the case of a listed company, such notice shall also be published a
least in one issue of a daily newspaper in the English language and a daily newspaper in
the Urdu language having circulation in the Province in which the stock exchange on which
it is listed is situate and a copy thereof shall be sent to the registrar immediately
thereafter.
(2) If a company makes default in complying with the requirements of subsection (1), it
shall be liable to a fine not exceeding one hundred rupees for every day during which the
default continues; and every officer of the company who without reasonable excuse
authorises or permits the default or is a party to the default shall be liable to a like
penalty.
(3) For the purpose of this section, a liquidator of a company shall be deemed to be an
officer of the company.
362.
Declaration of solvency in case of proposal to wind up voluntarily.-- (1) Where it is
proposed to wind up a company voluntarily, its directors, or in case the company has more
than three directors, the majority of the directors, including the chief executive, may,
at a meeting of the board of directors make a declaration verified by an affidavit to the
effect that they have made a full inquiry into the affairs of the company, and that having
done so, they have formed the opinion that the company has no debts, or that it will be
able to pay all its debts in full within such period not exceeding twelve months from the
commencement of the winding up, as may be specified in the declaration.
(2) A declaration made as aforesaid shall have no effect for the purposes of this
Ordinance, unless-
(a) it is made within the five weeks immediately preceding the date of the passing of the
resolution for winding up the company and is delivered to the registrar for registration
before that date; and
(b) it is accompanied by a copy of the report of the auditors of the company, prepared, so
far as the circumstances admit, in accordance with the provisions of this Ordinance, on
the profit and loss account of the company for the period commencing from the date up to
which the last such account was prepared and ending with the latest practicable date
immediately before the making of the declaration and the balance-sheet of the company made
out as on the last mentioned date and also embodies a statement of the company's assets
and liabilities as at that date.
(3) Any director of a company making a declaration under this section without having
reasonable grounds for the opinion that the company will be able to pay its debts in full
within the period specified in the declaration shall be punishable with imprisonment for a
term which may extend to six months, or with fine which may extend to ten thousand rupees,
or with both.
(4) If the company is wound up in pursuance of a resolution passed within the period of
five weeks after the making of the declaration, but its debts are not paid or provided for
in full within the period specified in the declaration; it shall be presumed, until the
contrary, is shown, that the director did not have reasonable grounds for his opinion.
(5) A winding up in the case of which a declaration has been made and delivered in
accordance with this section is in this Ordinance referred to as "a members'
voluntary winding up", and a winding up in the case of which a declaration has not
been so made and delivered is in this Ordinance referred to as "a creditors"
voluntary winding up".
(6) Subsections (1) to (3) shall not apply to a! winding up commenced before the
commencement of this Ordinance, in which case the provisions applicable immediately before
such commencement shall apply-
PROVISIONS APPLICABLE TO MEMBERS' VOLUNTARY WINDING UP
363.
Provisions applicable to members' voluntary winding up.-- The provisions contained in
sections 364 to 370, both inclusive, shall, subject to the provisions of section 371 apply
in relation to a members' voluntary winding up.
364. Appointment of liquidators.-- (1) The company in general
meeting shall appoint one or more liquidators, whose written consent to act as such has
been obtained in advance, for the purpose of winding up the affairs and distributing the
assets of the company.
(2) The liquidator or liquidators shall be entitled to such remuneration by way of
percentage of the amount realised by him or them by disposal of assets or otherwise, as
the company in general meeting may fix having regard to the amount and nature of the work
to be done and subject to the prescribed limits:
Provided that different percentage rates may be fixed for different .types of assets and
items.
(3) In addition to the remuneration payable under subsection (2), the company in general
meeting may authorise payment of a monthly allowance to the liquidator for meeting the
expenses of the winding up for a period not exceeding twelve months from the date of the
commencement of winding up.
(4) The remuneration fixed as aforesaid shall not be enhanced subsequently but may be
reduced by the Court at any time-
If the liquidator resigns, is removed from office or otherwise ceases to hold office
before conclusion of winding up, he shall not be entitled to any remuneration and
remuneration already received by him, if any, shall be refunded by him to the company.
(6) On the appointment of a liquidator all the powers of the directors, chief executive
and other officers shall cease, except for the purpose of giving notice of resolution to
wind up the company and appointment of liquidator and filing of consent of liquidator in
pursuance of sections 361 and 366 or in so far as the company in general meeting, or the
liquidator sanctions the continuance thereof.
(7) The liquidator shall not resign or quit his office as liquidator before conclusion of
the winding up proceedings except for reasons of personal disability, to the satisfaction
of the Court and may also be removed by the Court for reasons to be recorded.
(8) No remuneration shall be payable to a liquidator who fails
to complete the winding up proceedings within the prescribed period.
365. Power to fill vacancy in office of liquidator.-- (l) If
vacancy occurs by death, registration or otherwise in the office of any liquidator
appointed by the company, the company in general meeting may, subject to any arrangement
with its creditors, fill the vacancy by appointing a person who has given his written
consent to act as liquidator.
(2) For that purpose a general meeting shall be convened by the outgoing liquidator before
he ceases to act as liquidator except where the vacancy occurs by death, or where there
were more liquidators than one, by the continuing liquidator, and failing that may be
convened by any contributory, or by the Court on the application of the registrar or any
person interested in the winding up of the company.
(3) The meeting shall be held in the manner provided by this Ordinance or by the articles
or in such manner as may, on application by any contributory or by the continuing
liquidators, be determined by the Court.
(4) If default is made in complying with the provisions of this section, every person,
including the outgoing liquidator, who is in default shall be punishable with fine which
may extend to one hundred rupees for every day during which the default continues.
366. Notice of appointment of liquidator to be given to registrar
alongwith his consent.-- (1) Tim company shall give notice to the registrar of the
appointment of a liquidator or liquidators made by it under sections 364 and 375, of every
vacancy occurring in the office of liquidator, and of the name of the liquidator or
liquidators appointed to fill every such vacancy under section 365 or a change made under
section 368 and shall send therewith the consent of the liquidator to act as such where
any appointment is made.
(2) The notice aforesaid shall be given by the company within ten days of the event to
which it relates.
(3) If default is made in complying with subsection (1) or subsection (2) the company, and
every officer of the company (including every liquidator or outgoing or continuing
liquidator) who is in default, shall be punishable with fine which may extend to one
hundred rupees for every day during which the default continues.
367. Power of liquidator to accept shares, etc., as consideration
for sale of property of company.-- (1) Where--
(a) a company (in this section called the "transferor company") is proposed to
be, or is in the course of being, wound up altogether voluntarily; and
(b) the whole or a part of its business or property is proposed to be transferred or sold
to another body corporate, whether a company within the meaning of this Ordinance or not
(in this section called "the transferee company");
the liquidator of the transferor company may, with the sanction of a special resolution of
that company conferring on the liquidator either a general authority or an authority in
respect of any particular arrangement--
(i) receive, by way of compensation or part compensation for the transfer or sale, shares,
policies, or other like interests in the transferee company, for distribution among the
members of the transferor company; or
(ii) enter into any other arrangement whereby the members of the transferor company may,
in lieu of receiving cash, shares, policies, or other like interests or in addition
thereto, participate in the profits of, or receive any other benefit from, the transferee
company.
(2) Any sale or arrangement in pursuance of this section shall be binding on the members
of the transferor company.
(3) If any member of the transferor company who did not vote in favour of the special
resolution expenses his dissent therefrom in writing addressed to the liquidator and left
at the registered office of the company within seven days after the passing of the special
resolution, he may require the liquidator either--
(a) to abstain from carrying the resolution into effect: or
(b) to purchase his interest at a price to be determined by agreement or by arbitration in
the manner hereafter provided.
(4) If the liquidator elects to purchase the member's interest, the purchase money shall
be paid before the company is dissolved, and be raised by the liquidator in such manner as
may be determined by special resolution.
(5) A special resolution shall not be invalid for the purpose of this section by reason
only that it is passed before or concurrently with a resolution for voluntary. winding up
or for appointing liquidators; but, if an order is made within a year for winding up the
company by or subject to the supervision of the Court, the special resolution shall not be
valid unless it is sanctioned by the Court.
(6) The provisions of the Arbitration Act, 1940 (X of 1940), other than those restricting
the application of this Ordinance in respect of the subject-matter of the arbitration,
shall apply to all arbitrations in pursuance of this section.
368. Duty of liquidator to call creditors' meeting in case of
insolvency.-- (1) If. in the case of a winding up commenced after the commencement of
this Ordinance, the liquidator is at any time of opinion that the company will not be able
to pay its debts in full within the period stated in the declaration trader section 362,
or that period has expired without the debts having been paid in full, he shall forthwith
summon a meeting of the creditors and shall lay before the meeting a statement of the
assets and liabilities of the company and such other particulars as may be prescribed.
(2) Where subsection (1) becomes applicable, the creditors may in their meeting held as
aforesaid appoint a different liquidator who has consented to act as such and in that case
the person so appointed shall be the liquidator unless otherwise directed by the Court.
(3) A return of convening the creditors meeting as aforesaid alongwith a copy of the
notice thereof and a statement of assets and liabilities of the company and the minutes of
the meeting shall be filed with the registrar within ten days of the date of the meeting.
(4) If the liquidator fails to comply with any of the requirements of this section, he
shall be punishable with fine which may extend to five thousand rupees and, in the case of
a continuing failure, to a further fine not exceeding one hundred rupees for every day
after the first during which the failure continues.
369. Duty of liquidator to call general meeting at the end of each
year.-- (1) Subject to the provisions of section 371, in the event of the winding up
continuing for more than one year, the liquidator shall--
(a) summon a general meeting of the company at the end of the first year from the
commencement of the winding up and, if the proceedings are not concluded during the first
year and extension is granted under section 387, within thirty days of such extended
period;
(b) lay before the meeting an audited account of his receipts and payrnents and acts and
dealings and of the conduct of the winding up during the preceding year together with a
statement in the prescribed form and containing the prescribed particulars with respect to
the proceedings in and position of the liquidation, including reasons for the delay in
finalisation of the winding up, steps taken and being taken to expedite it and the time
required for the purpose; and
(c) forward by post to every contributory a copy of the account and statement referred to
in clause (b) together with the auditor's report and notice and of the meeting at least
ten days before the meeting required to be held under this section.
(2) A return of convening of each general meeting together with a copy of the notice,
account and statement as aforesaid and the minutes of the meeting shall be filed by the
liquidator with the registrar within ten days of the date of the meeting.
(3) If the liquidator fails to comply with this section, he shall be liable, in respect of
each failure, to a fine not exceeding five thousand rupees and, in the case of a
continuing failure, to a further fine not exceeding one hundred rupees for every day after
the first during which the failure continues.
370. Final meeting and dissolution.-- (1) Subject to the
provisions of section 371, as soon as the affairs of the company are fully wound up, the
liquidator shall--
(a) make up a report and account of the winding up, showing how the winding up has been
conducted and the property of the company has been disposed of and such other particulars
as may be prescribed; and
(b) call a general meeting of the company for the purpose of laying the report and account
before it. and giving any explanation thereof.
(2) The account referred to in clause (a) of subsection (1) shall be audited and a copy
there of together with a copy of the auditor's report and notice of meeting shall be sent
by post to each contributory of the company at least ten days before the meeting required
to be held under this section.
(3) The notice of the meeting specifying the time, place and object of the meeting shall
also be published at least ten days before the date of the meeting in the manner specified
in subsection (1) of section 361 for publication of a notice under that subsection.
(4) Within one week after the meeting, the liquidator shall send to the registrar a copy
of his report and account, and shall make a return to him of the holding of the meeting
alongwith the minutes of the meeting in the prescribed manner.
(5) If a quorum is not present at the meeting, the liquidator shall in lieu of the return
referred to in subsection (4), make a return that the meeting was duly summoned and that
no quorum was present threat and upon such a return being made within one week after the
date fixed for the meeting alongwith a copy of his report and account in the prescribed
manner. the provisions of subsection (4) as to the making of the return shall be deemed to
have been complied with.
(6) The registrar, on receiving the report and account and either the return mentioned in
subsection (4) or the return mentioned in subsection (5). shall, after such scrutiny as he
may deem fit, register them, and on tile expiration of three months from such
registration, the company shall be deemed to be dissolved:
Provided that, if on his scrutiny the registrar considers that the affairs of the company
or the liquidation proceedings have been conducted in a manner prejudicial to its interest
or the interests of its creditors and members or that any actionable irregularity has been
committed, he may take action in accordance with the provisions of this Ordinance:
Provided further that the Court, may on the application of the liquidator or of any other
person who appears to the Court to be interested, make an order deferring the date at
which the dissolution of the company is to take effect for such time as the Court thinks
fit.
(7) It shall be the duty of the person on whose application an order of the Court trader
the foregoing proviso is made, within fourteen days after the making of the order.- to
deliver to the registrar a certified copy of the order for registration. and. if that
person fails so to do, he shall be liable to a fine not exceeding one hundred rupees for
every. day during which the default continues.
(8) If the liquidator fails to comply with any requirements of this section, he shall be
punishable with fine which may extend to five thousand rupees and, in the case of a
continuing failure, to a further fine which may extend to one hundred rupees for every day
after the first during which the failure continues.
371. Alternative provisions as to annual and final meetings in case
of insolvency.-- Where section 368 has effect, sections 381 and 382 shall apply to the
winding up, to the exclusion of sections 369 and 370 as if the winding up were creditors'
voluntary winding up and not a members' voluntary winding up:
Provided that the liquidator shall not be required to summon a meeting of creditors under
section 38 at the end of the first year from the commencement of the winding up, unless
the meeting held under section 368 has been held more than three months before the end of
the year.
PROVISIONS APPLICABLE TO CREDITORS' VOLUNTARY WINDING UP
372.
Provisions applicable to creditors' voluntary winding up.-- The provisions contained
in sections 373 to 382, both inclusive. shall apply in relation to creditors' voluntary.
winding up.
373. Meeting of creditors.-- (l) The company shall cause a
meeting of the creditors of the company to be summoned for the day, or the day next
following the day, on which there is to be held the general meeting of the company at
which the resolution for voluntary winding up is to be proposed, and shall cause the
notices of the said meeting of creditors to be sent by post to the creditors
simultaneously with the sending of the notices of the general meeting of the company.
(2) The company shall cause notice of the meeting of the creditors to be advertised in the
manner specified in subsection (1) of section 361 for the publication of a notice under
that subsection.
(3) The directors and chief executive of the company shall-
(a) cause a full statement of the position of the company's affairs and assets and
liabilities together with a list of the creditors of the company and the estimated amount
of their claims to be laid before the meeting of creditors to be held as aforesaid; and
(b) appoint one of their number to preside at the said meeting.
(4) It shall be the duty of the director appointed to preside at the meeting of creditors
to attend the meeting and preside thereat.
(5) If the meeting of the company at which the resolution for voluntary winding up is to
be proposed is adjourned and the resolution is passed at an adjourned meeting, any
resolution passed at the meeting of the creditors, held in pursuance of subsection (1) of
this section, shall have effect as if it had been passed immediately after the passing of
the resolution for winding up the company.
(6) If default is made-
(a) by the company in complying with subsections (1) and (2);
(b) by the directors and chief executive of the company in complying with subsection (3);
(c) by any director of the company in complying with subsection (4);
the company, each of the directors or the director or the chief executive, as the case may
be, shall be punishable with fine which may extend to five thousand rupees and, in the
case of a continuing default, to a further fine which may extend to one hundred rupees for
every day after the first during which the default continues and, in the case of default
by the company, every officer of the company who is in default shall be liable to the like
punishment.
374. Notice of resolution passed by creditors' meeting to be given
to registrar.-- (1) Notice of any resolution passed at a creditors' meeting in
pursuance of section 373 shall be given by the company to the registrar, alongwith the
consent of the liquidator to act as such, within ten days of the passing thereof.
(2) If default is made in complying with subsection (1), the company and every officer of
the company who is in default shall be punishable with free which may extend to two
hundred rupees for every day during which the default continues.
(3) For the purpose of this section, a liquidator of the company shall be deemed to be an
officer of the company.
375. Appointment of liquidator.-- (l) The creditors and the
company at their respective meetings mentioned in sections 368 and 373 may nominate a
person, who has given his written consent to act as such, to be liquidator for the purpose
of winding up the affairs and distributing the assets of the company.
(2) If the creditors and company nominate different persons, the person nominated by the
creditors shall be liquidator.
Provided that any director, member or creditor of the company may, within seven days after
the date on which the nomination was made by the creditors, apply to the Court for an,
order either directing that the person nominated as liquidator by the company shall be
liquidator instead of or jointly with the person nominated by the creditors, or appointing
some other person to be liquidator instead of the person appointed by the creditors.
(3) If no person is nominated by the creditors, the person, if any, nominated the company
shall be liquidator.
(4) If no person is nominated by the company, the person, if any nominated by the
creditors shall be the liquidator.
(5) The liquidator shall not resign or quit his office as liquidator before conclusion of
the winding up proceedings except for reasons of personal disability to the satisfaction
of the Court and may also be removed by the Court for reasons to be recorded.
376. Appointment of committee of inspection.-- (1) The creditors at
the meeting to be held in pursuance of section 368 or 373 or at any subsequent meeting
may, if they think fit, appoint a committee of inspection consisting of not more than five
persons.
(2) If such a committee is appointed, the company may either at the meeting at which the
resolution for voluntary winding up is passed or at any subsequent general meeting,
appoint such number of persons, not exceeding five, as they think fit to act as members of
the committee:
Provided that the creditors may, if they think fit, resolve that all or any of the persons
so appointed by the company ought not to be member of the committee of inspection.
(3) If the creditors so resolve, the person mentioned in the resolution shall not, unless
the Court otherwise directs. be qualified to act as a member of the committee.
(4) On ally application to the Court for a direction under subsection (3), the Court may,
if it thinks fit, appoint other persons to act as such members in place of the persons
mentioned in the creditors' resolution.
(5) Subject to the provisions of subsections (2) to (4) and to such rules as may be
prescribed, the provisions of section 332, except subsection (1) thereof shall apply with
respect to a committee of inspection appointed under this section as they apply with
respect to a committee of inspection appointed in a winding up by the Court.
377. Fixing of liquidator’s remuneration.-- (1) The
liquidator shall be entitled to such remuneration by way of percentage of the amount
realised by him by disposal of assets or otherwise as the committee of inspection, or if
there is no such committee, the creditors may fix having regard to the amount and nature
of the work to be done and not exceeding the prescribed limits:
Provided that different percentage rates may be fixed for different types of assets and
items.
(2) In addition to the remuneration payable under subsection (1), the committee of
inspection or the creditors, as the case may be, may authorise payment of a monthly
allowance to the liquidator for meeting the expenses of the winding up for a period not
exceeding twelve months from the date of commencement of winding up.
(3) The remuneration fixed as aforesaid shall not be enhanced subsequently but may be
reduced by the Court at any time.
(4) If the liquidator resigns, is removed from office or otherwise ceases to hold office
before conclusion of winding up, he shall not be entitled to any remuneration and the
remuneration already received by him, if, any, shall be refunded by him to the company.
378. Directors' powers to cease on appointment of liquidator.--
On the appointment of a liquidator, all the powers of the directors, chief executive and
other officers shall cease, except for the purpose of giving notice of resolution to wind
up and appointment of the liquidator and filing of consent of the liquidator as required
under this Ordinance and except so far as the committee of inspection or if there is no
such committee, the creditors, in general meeting may sanction the continuance thereof.
379. Power to fill vacancy in office of liquidator.-- If a
vacancy occurs, by death, resignation or otherwise. in the office of a liquidator, other
than a liquidator appointed by or by the direction of. the Court, the creditors in general
meeting may fill the vacancy by appointing a person who has given his written consent to
act as liquidator, and for this purpose the provisions of section 365 shall mutatis
mutandis apply.
380. Application of section 367 to a creditors' voluntary winding
up.-- The provisions of section 367 shall apply in the case of a creditors' voluntary
winding up as in the case of a members' voluntary winding up with the modification that
the powers of the liquidator under the said section shall not be exercised except with the
sanction either of the Court or of the committee of inspection.
381. Duty of liquidator to call meetings of company and of creditors at
the end of every year.-- (1) In the event of the winding up continuing for more than
one year. the liquidator shall--
(a) summon a general meeting of the company and a meeting of creditors at the and of the
first year from the commencement of the winding up and, if the proceedings are not
concluded during the first year and extension is granted under section 387, within thirty.
days of such extended period;
(b) lay before the meetings an audited account of his receipts and payments and acts and
dealings and of the conduct of winding up during the preceding year together with a
statement in the prescribed form and containing the prescribed particulars with respect to
the proceedings and position of liquidation including reasons for the delay in
finalisation of the winding up, steps taken and being taken to expedite it and the time
required for the purpose; and
(c) forward by post to every creditor and to every contributory. a copy of the account and
statement referred to in clause (b) together with the auditors' report and notice of the
meeting at least ten days before the meeting required to be held under this section.
(2) A return of convening of each general meeting and creditors' meeting together with a
copy each of the notices, accounts and statements as aforesaid and the minutes of the
meetings shall be filed with the registrar within ten days of the date of the meeting.
(3) If the liquidator fails to comply with this section, he shall be liable in respect of
each failure to a fine which may extend to five thousand rupees and, in the case of a
continuing failure, to a further fine which may extend to one hundred rupees for every day
after the first during which the failure continues.
382. Final meeting and dissolution.-- (l) As soon as the affairs
of the company are fully wound up, the liquidator shall--
(a) make up a report and account of the winding up, showing how the winding up has been
conducted and the property of the company has been disposed of and such other particulars
as may be prescribed; and
(b) call a general meeting of the company and a meeting of the creditors for the purpose
of laying the report and account before the meetings and giving any explanation thereof.
(2) The account referred to in clause (a) of subsection (1) shall be audited and a copy
thereof together with a copy of the auditor's report and notice of the meeting shall be
sent by post to each contributory and creditor of the company at least ten days before the
meetings required to be held under this section.
(3) The notice of the meetings referred to in this section specifying the time, place and
object thereof shall also be published at least ten days before the meeting in the manner
specified in subsection (1) of section 361 for the publication of a notice under that
subsection.
(4) Within one week after the date of the meetings, or if the meetings are not held on the
same date, after the date of the latter meeting, the liquidator shall send to the
registrar a copy of his report and account, and shall make a return to him of the holding
of the meetings alongwith the minutes of the meetings in the prescribed manner.
(5) If a quorum (which for the purpose of this section shall be two persons) is not
present at either of such meetings, the liquidator shall, in lieu of the return referred
to in subsection (4), make a return that the meetings were duly summoned and that no
quorum was present thereat and, upon such return being made within one week after the date
fixed for the meetings alongwith a copy of his report and account in the prescribed
manner, the provisions of subsection (4) as to making of the return shall, in respect of
that meeting, be deemed to have been complied with.
(6) On receiving the report and account and also, in respect of each such meeting either
the return mentioned in subsection (4) or the return mentioned in subsection (5), the
registrar shall after such scrutiny as he may deem fit, register them, and on the
expiration of three months from the registration thereof the company shall be deemed to be
dissolved:
Provided that, if on his scrutiny the registrar considers that the affairs of the company
or the liquidation proceedings have been conducted in a manner prejudicial to its
interests or the interests of its creditors or members or that any actionable irregularity
has been committed, he may take action in accordance with the provisions of this
Ordinance:
Provided further that the Court may, on the application of the liquidator or any other
person who appears to the Court to be interested, make an order deferring the date at
which the dissolution of the company is to take effect for such time as the Court thinks
fit.
(7) It shall be the duty of the person on whose application an order is made by the Court
under the foregoing proviso, within fourteen days after the making of the order to deliver
to the registrar a certified copy of the order for registration and, if that person fails
so to do, he shall be liable to a fine which may extend to one hundred rupees for every
day during which the default continues.
(8) If the liquidator fails to comply with any requirements of this section, he shall be
punishable with fine which may extend to five thousand rupees and, in the case of a
continuing failure to a further fine which may extend to one hundred rupees for every day
after the first during which the failure continues.
PROVISIONS APPLICABLE TO EVERY VOLUNTARY WINDING UP
383.
Provisions applicable to every voluntary winding up.-- The provisions contained in
sections 384 to 395, both inclusive, shall apply to every voluntary winding up whether a
members' or a creditors' winding up.
384. Accounts and statements to be audited.-- (1) All accounts
and statements referred to in sections 369, 370, 381 and 382 shall, before being placed
before the meetings of the creditors or contributories. be duly audited by an auditor
appointed in the manner provided in section 434.
(2) The auditor's report shall be annexed to the accounts and statements referred to in
subsection (1).
(3) The auditor shall submit his report within two months of the end of the period to
which the accounts relate, or within such extended time as may be allowed to him by the
registrar.
(4) Whoever fails to comply with any provision of this section shall be punishable with a
fine which may extend to five thousand rupees.
385. Distribution of properly of company.-- Subject to the
provisions of this Ordinance as to preferential payments, the property of a company shall,
on its winding up, be applied in satisfaction of its liabilities pari passu and, subject
to such application shall, unless the articles otherwise provide, be distributed among the
members according to their rights and interests in the company.
386. Application of sections 328 and 329 to voluntary winding up.--
The provisions of sections 328 and 329 shall, so far as may be, apply to every voluntary.
winding up as they apply to winding up by the Court except that references to--
(a) "the Court" shall be omitted;
(b) the "official liquidator" or the "provisional manager" shall be
construed as references to the liquidator; and
(c) the "relevant date" shall be construed as reference to the date of
commencement of the winding up; and
the report referred to in section 329 shall be submitted to the registrar instead of the
Court;
387. Powers and duties of liquidator in voluntary winding up.--
(1) The liquidator may--
(a) in the case of a members' voluntary, winding up, with the sanction of a special
resolution of the company, and, in the case of a creditors' voluntary winding up, of
either the Court or the committee of inspection, or (if there is no such committee) of a
meeting of the creditors, exercise any of the powers given by subsection (1) of section
333 to a liquidator in a winding up by the Court;
(b) without the sanction referred to in clause (a), exercise any of the other powers given
by this Ordinance to the liquidator in a winding up by the Court;
(c) exercise the power of the Court under this Ordinance of settling a list of
contributories, which shall be prima-facie evidence of the liabilities of the persons
named therein to be contributories;
(d) exercise the power of the Court of making calls;
(e) summon general meetings of the company and creditors for the purpose of obtaining the
sanction of the company by special resolution or for any other purpose he may think fit.
(2) The exercise by the liquidator of the powers given by clause (a) of subsection (1)
shall be subject to the control of the Court; and any creditor or contributory may apply
to the Court with respect to any exercise or proposed exercise of any of the power
conferred by this section.
(3) The liquidator shall pay the debts of the company and shall adjust the rights of the
contributories, among themselves.
(4) The liquidator shall within thirty days of the coming into his hands of any funds
sufficient to distribute among the creditors or contributories after providing for
expenses of the winding up or for other preferential payments as provided in this
Ordinance, distribute in accordance with the provisions of this Ordinance:
Provided that such portion of the funds as may be required for meeting any claim against
the company which may be sub judice or subject-matter of adjudication or assessment shall
not be distributed till the claim is finally settled:
Provided further that any amounts retained as aforesaid shall be invested by the official
liquidator in Khas Deposit Certificates or in such other securities or instruments as may
be prescribed and the distribution thereof shall be made by him after the pending claims
are settled.
(5) The winding up proceedings shall be completed by the liquidator within a period of one
year from the date of commencement of winding up:
Provided that the Court may, of the application of the liquidator, grant extension by one
month at any time but such extensions shall not exceed a period of six months in all and
shall be allowed only for the reason that any proceedings for or against the company are
pending in a Court and the Court shall also have the power to require expeditious disposal
of such proceedings as it could under section 317 if the company was being wound up by the
Court.
(6) If an official liquidator is convicted of misfeasance, or breach of duty or other
lapse or default in relation to winding up proceedings of a company, he shall cease to be
the official liquidator of the company and shall also become disqualified, for a period of
five years from such conviction, from being the liquidator of, or to hold any other office
including that of a director in any company and if he already holds any such office he
shall forthwith be deemed to have ceased to hold such office.
(7) When several liquidators are appointed, any power given by this Ordinance may be
exercised by such one or more of them as may be determined at the time of their
appointment; or, in default of such determination, by any two or more of them.
388. Power of Court to appoint and remove liquidator in voluntary
winding up.-- (1) If from any cause whatever, there is no liquidator acting, the Court
may appoint an official liquidator in accordance with the provisions of section 321 who
shall have the same powers, be subject to the same obligations and in all respects stand
in the same position as an official liquidator appointed by the Court has in winding up by
the Court.
(2) The Court may, on cause shown, remove a liquidator and appoint an official liquidator
in his place on the application of any creditor or contributory or the registrar or a
person authorised by the Authority.
(3) The remuneration to be paid to the official liquidator appointed under subsection (1)
or subsection (2) shall be fixed by the Court as if the company were being wound up by the
Court.
389. Notice by liquidator of his appointment.-- (1) Every
liquidator shall, within fourteen days after his appointment, publish in the official
Gazette, and deliver to the registrar for registration, a notice of his appointment in the
form prescribed.
(2) If the liquidator fails to comply with the requirements of subsection (1), he shall be
liable to a fine not exceeding two hundred rupees for everyday during which the default
continues.
390. Arrangement when binding on company and creditors.-- (1)
Any arrangement entered into between a company about to be, or in the course of being
wound up and its creditors shall, subject to the right of appeal under this section, be
binding on the company if sanctioned by a special resolution and on the creditors if
acceded to by three-fourth in number and value of the creditors.
(2) Any creditor or contributory may, within twenty-one days from the completion of the
arrangement, appeal to the Court against it, and the Court may thereupon, as it thinks
just, amend, vary, confirm or set aside the arrangement.
391. Power to apply to Court to have questions determined or powers
exercised-- (1) The liquidator or any contributory or creditor may apply to the
Court--
(a) to determine any question arising in the winding up of a company; or
(b) to exercise as respects the enforcing of calls, the staying of proceedings or any
other matter, all or any of the powers which the Court might exercise if the company were
being wound up by the Court.
(2) The liquidator or any contributory may apply to the Court specified in sub section (3)
for an order setting aside any attachment, distress or execution put into force against
the estate or effects of the company after the commencement of the winding up.
(3) An application under subsection (2) shall be made--
(a) if the attachment, distress or execution is levied or put into force by a High Court,
to such High Court, and
(b) if the attachment, distress or execution is levied or put into force by any other
Court, to the Court having jurisdiction to wind up the. company.
(4) The Court, if it is satisfied that the determination of the question or the required
exercise of power or the order applied for will be just and beneficial, may accede wholly
or partially to the application on such terms and conditions as it thinks fit, or may make
such other orders on the application as it thinks just.
(5) A copy of an order staying the proceedings in the winding up, made by virtue of this
section, shall forthwith be forwarded by the company, or otherwise as may be prescribed,
to the registrar, who shall make a minute of the order in his books relating to the
company.
392. Application of liquidator to Court for public examination of
promoters, directors, etc.-- The liquidator may make a report to the Court stating
that in his opinion a fraud or any other actionable irregularity has been committed by any
person in the promotion or formation of the company or by any officer of the company in
relation to the company since its formation; and the Court may, after considering the
report, direct that person or officer shall attend before the Court on a day appointed by
it for that purpose, and be publicly examined as to the promotion or formation or the
conduct of the business of the company, or as to his conduct and dealings as officer
thereof, in the manner provided for such examination in the case of winding up of a
company by the Court.
393. Costs of voluntary winding up.-- All costs, charges and
expenses properly incurred in the winding up, including the remuneration of the liquidator
shall subject to the rights of secured creditors, if any, be payable out of the assets of
the company in priority to all other claims.
394. Saving for right of creditors and contributories.-- The
voluntary winding up of a company shall not bar the right of any creditor or contributory
to have it wound up by the Court, but in the case of an application by a contributory, the
Court must be satisfied that the rights of the contributories will be prejudiced by a
voluntary winding up.
395. Power of Court to adopt proceedings of voluntary winding up.--
Where a company is being wound up voluntarily, and an order is made for winding up by the
Court, the Court may, if it thinks fit by the same or any subsequent order, provide for
the adoption of all or any of the proceedings in the voluntary winding up.
WINDING UP SUBJECT TO SUPERVISION OF COURT
396. Power
to order winding up subject to supervision.-- When a company has passed a resolution
for voluntary, winding up, the Court may of its own motion or on the application of any
person entitled to apply to the Court for winding up a company, make an order that the
voluntary winding up shall continue, but subject to such supervision of the Court, and
with such liberty for creditors, contributories or others to apply to the Court, and
generally on such terms and conditions, as the Court thinks just.
397. Effect of petition for winding up subject to supervision.--
A petition for the continuance of a voluntary winding up subject to the supervision of the
Court shall, for the purpose of giving jurisdiction to the Court over suits and other
legal proceedings, be deemed to be a petition for winding up by the Court.
398. Court may have regard to wishes of creditors and
contributories.-- The Court may, in deciding between a winding up by the Court and a
winding up subject to supervision, in the appointment of liquidators. and in all other
matters relating to the winding up subject to supervision, have regard to the wishes of
the creditors or contributories as proved to it by any sufficient evidence but subject to
the provisions which would have been applicable had the company been wound up by the
Court.
399. Power to replace liquidator.-- (1) Where an order is made
for winding up subject to supervision, the Court shall by that order appoint an official
liquidator who shall have the same powers, be subject to the same obligations and in all
respects stand in the same position as if he had been appointed by the company.
(2) An application trader this section may be made to the Court by any creditor or
contributory or the registrar or a person authorised by the Authority in this behalf.
400. Effects of supervision order.-- (l) When an order is made
for a winding up subject to supervision, the liquidator may subject to any restrictions
imposed by the Court, exercise all his powers, without the sanction or intervention of the
Court, in the same manner as if the company were being wound up altogether voluntarily.
(2) Except as provided in subsection (1), and save for the purposes of section 352 an
order made by the Court for a winding up subject to the supervision of the Court shall for
all purposes including the staying of suits and other proceedings, be deemed to be an
order of the Court for winding up the company by the Court, and shall confer full
authority on the Court to make call or to enforce calls made by the liquidator, and to
exercise all other powers which it might have exercised if an order had been made for
winding up the company altogether by the Court.
(3) In the construction of the provisions whereby the Court is empowered to direct any act
or thing to be done to or in favour of the official liquidator, the expression
"official liquidator" shall be deemed to mean the liquidator conducting the
winding up subject to the supervision of the Court.
(4) Unless otherwise directed by the Court, an order for winding up subject to supervision
shall not in any way affect the duties, obligations and liabilities of the liquidator as
provided for in respect of voluntary winding up.
401. Appointment or voluntary liquidator as official liquidator in
certain cases.-- Where an order has been made for the winding up of a company subject
to supervision, and an order is afterwards made for winding up by the Court, the Court
shall by the last mentioned order appoint the voluntary liquidator, either provisionally
or permanently, and either with or without the addition of any other person, to be
official liquidator in the winding up by the Court.
PROVISIONS
APPLICABLE TO EVERY MODE OF WINDING UP STATUS
OF COMPANIES BEING WOUND UP
402. Status of companies being wound up, etc.-- A company being wound up shall continue to be a company for all purposes till its final dissolution in accordance with the provisions of this Ordinance and, unless other wise specified, all provisions and requirements of this