Winding up of the Private Ltd.

Company by Court:
Law and Procedure
A private limited company is a company which is privately held for independent ventures. The
obligation of the individuals from a Private Limited Company is constrained to the quantity of
offers separately held by them. Shares of Private Limited Company can't be traded on an open
market.

A private ltd. Company has several ways for its closure. But the one on which we are focussing
is the closure by the court or the tribunal.

“Winding up is a proceeding by means of which the dissolution of a company is brought about

& in the course of which its assets are collected and realised; and applied in payment of its
debts; and when these are satisfied, the remaining amount is applied for returning to its
members the sums which they have contributed to the company in accordance with Articles of
the Company.”1

Section 2702. Modes of winding up

(1) The winding up of a company may be either—

(a) By the Tribunal; or
(b) Voluntary.
(2) Notwithstanding anything contained in any other Act, the provisions of this Act with
respect to winding up shall apply to the winding up of a company in any of the modes
specified under sub-section (1).

The Companies Act, 2013 contains several new rules for closure of a company, updating those
contained in the Companies Act, 1956.

An important one is that the Act discovers that an association can be wound up by a Tribunal
for any no less than one of the going with reasons:

1. If the association can't repay their commitments/credits;

2. If the set-up (association) has an assurance set up that it can be split down or wound up
through a court under particular conditions;

1
Halsbury’s Laws of England
2
The Companies Act, 2013
3. If the association has not reported returns or submitted financial enunciations for five
consecutive years;

4. If the association has acted against the uprightness and influence of the country and has
intruded against the association between neighbouring or remote countries and India;

5. If the association has picked (by strategies for any finds or by Chapter XIX) that it is perfect
to contort up the operations of the association;

6. If the association or its people have been locked in with any phony trades, been getting
money related advantage through unlawful trades or the association has been obtaining benefits
through beguiling means;

7. In any of the above cases, a court is formed and an assurance is taken to bend up the
operations of the association under scrutiny. Such court decisions are respected last and ensuing
to hearing the demand, a Form 11 is issued for winding up.

The above said conditions are mentioned in the Section 271 of the Companies Act, 2013.

The whole Chapter XX Part I of the Companies Act, 2013 provides for the Winding up of the
company by tribunal. That is from section 271 to section 303. Which is summarised in the
given points.

Procedure for winding up by Court or Tribunal:

1. The court or council will set the system moving by sending a notice to an official outlet.
This individual will be accountable for the organization and do the way toward winding
it up.
2. The court will likewise set up the winding up arrange, which should be served on all
loan bosses and benefactors, requesting that they advance forward. The request is to be
served even upon those who've recorded the appeal to for winding up.
3. The vendor, delegated by focal government, might look at the books of the
organization, trade out hand, bank adjust, liabilities, lenders, credits, and so forth.
4. The authority outlet must, in the following a half year, outfit to the court a preparatory
give an account of the records, liabilities, borrowers and money and debatable securities
accessible. The vendor will likewise state if an investigation into the organization is
required.
5. If no request is made, the outlet must make sure that the accessible cash is genuinely
partitioned between all banks until depleted. The outlet will present to the court a total
record of how the cash, resources and operations were partitioned.
6. After investigation of the record, the court articulates the disintegration of the
organization.