 Introduction

A liquidator has power to sell company’s properties in case of Compulsory Winding Up with
the sanction of the winding- up Court i.e. NCLT. Section 290(1)(c) of the Companies Act,
2013 Act authorizes the liquidator in a winding up to have power with the sanction of the
Court to sell the immovable and movable property and actionable claims of the company by
public auction or private contract, with power to transfer the wholw thereof to any person or
body corporate or to sell the same in parcels.1

 Contracting With Liquidators (Conditions imposed during Winding Up Process)

A liquidator can also enter into contracts on behalf of a company, including purchasing goods
and services, but only if it is necessary for the winding up of the company, i.e. realising its
assets and paying its debts.

This may include:

 selling property of the company

 carrying on the business of the company so far as necessary for the beneficial disposal
or winding up of the company (eg so that the business may be sold as a going
concern)
 doing other things necessary for the winding up

Notably, unlike administrators, there are no statutory provisions imposing personal liability
on liquidators for debts they incur on behalf of the company.

Rather, debts incurred by a liquidator on behalf of the company constitute expenses of

the winding-up and (as such) are payable in priority over other debts of the company out of
the property of the company recovered in the winding-up.

If insufficient funds are available in the liquidation, the liquidator is required to pay such
debts proportionately from such funds that are available (if any) and is personally
exposed only to the extent he or she might fail to do so.

1
Rohtas Industries Ltd. v. Official Liquidator (2005) 128 Comp. Cas. 421 (Pat.); Mrs. Usha Anand v. Dior
International P. Ltd ( In Liquidation ), 2006 129 Comp. Cas. 209 (Delhi) (DB).
  DISQUALIFICATION GROUNDS

The disqualification imposed upon the Liquidator are that the Liquidator cannot come into a
contract with a person as mentioned hereunder, and shall not be eligible to submit a
resolution plan.

Further, any other person acting jointly or in concert with the prospective resolution applicant
shall not be covered under the following disqualifications –

a) the person is an undischarged insolvent;

b) the person is a wilful defaulter in terms of the RBI Guidelines issued under the
Banking Regulation Act, 1949;
c) the person has an account, or an account of a corporate debtor under the management
or control of such person or of whom such person is a promoter, classified as non-
performing asset in accordance with RBI Guidelines issued under the Banking
Regulation Act, 1949 and at least a period of 1 (One) year has lapsed from the date of
such classification till the date of commencement of the corporate insolvency
resolution process of the corporate debtor: Provided that the person shall be eligible
to submit a resolution plan if such person makes payment of all overdue amounts
with interest thereon and charges relating to nonperforming asset accounts before
submission of resolution plan;
d) the person has been convicted for any offence punishable with imprisonment for 2
years or more;
e) the person is disqualified to act as a director under the Companies Act, 2013; the
person is prohibited by SEBI from trading in securities or accessing the securities
markets;
f) the person has been a promoter or in the management or control of a corporate
debtor in which a preferential transaction, undervalued transaction, extortionate
credit transaction or fraudulent transaction has taken place and an order has been
made by the adjudicating authority under the provisions of the Code;
g) a person who has executed an enforceable guarantee in favour of a creditor, in
respect of a corporate debtor against which an application for insolvency resolution
made by such creditor has been admitted under the Code;
h) a person who has been subject to the above listed disabilities under any law in a
jurisdiction outside India;
i) connected persons, i.e. persons connected to the person disqualified under any of the
aforementioned points, such as those who are promoters or in management of control
of the resolution applicant, or will be promoters or in management of control of the
business of the corporate debtor during the implementation of the resolution plan, the
holding company, subsidiary company, associate company or related party of the
above referred persons – exception has been carved out for scheduled banks, asset
reconstruction companies registered with RBI under Section 3 of the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002, and alternative investment funds registered with SEBI.