MODES OF WINDING UP

A company registered under the Companies Act, 1956 may be wound up in any
of the following modes:
1. By the Court i.e. compulsory winding up;

2. Voluntary winding up, which may be either

(a) Members’ voluntary winding up; or

(b) Creditor’s voluntary winding up;

3. Winding up subject to the supervision of the Court.

Section 425 of the Companies Act, 1956 lays down the above three modes of
winding up and provides that the provisions of the Act with respect to winding up
shall apply, unless the contrary appears, to the winding up of a company in any of
these three modes.

In every winding up, a liquidator or iquidators is or are appointed to administer the

property of the company and he or they must apply the assets of the company, first,
in the payment of the creditors in their proper order, and then, in distributing the
residue among the members according to their rights.