The Company Law in India has been modelled after the Company Law in England.

In 1850, the English Companies Act, 1844, which served as the model for the first legislative act
for the registration of joint stock companies, was approved.1 Many legislations have been passed
since then. It is possible to view important laws from 1956, 2002, 2013, and most recently IBC,
2016, as being crucial to the growth of India's economy and corporate governance.2
Professor Grower defined “Liquidator or winding up of a company as the process whereby its
life is ended, and its property is administered for the benefit of its 70 creditors and members. An
administrator, called a liquidator, is appointed. He takes control of the company, collects its
assets, pays its debts, and finally distributes any surplus among the members of their rights."3

Under the Companies Act,1956, the Act explained the procedure of companies winding up and
what happens in detail during the liquidation period under section 426 to section 560. The
Companies Act of 2013 established two grounds for the company's voluntary winding up and
seven grounds for the compulsory winding up. Most crucially, the Companies Act of 2013 added
the provision for safeguarding the integrity and sovereignty of the country in section 271(c).
After then, the IBC, 2016 was passed in this regard under the new law, given the inability to
provide great importance.

The power to file for the winding up of the company has been conferred upon the Creditor,
Court, the Members of the company, contributor, the Registrar, person authorised by the Central
Government or the State Government.4

Chapter XX of the Companies Act, 2013 regulates companies' winding up in India. Under S.
270, it enumerates broadly two modes of winding up of a company -
1. By the Tribunal (National Company Law Tribunal)
2. Voluntary

1 https://lawcorner.in/history-of-company-law-in-india/
2 https://taxguru.in/company-law/company-law-evolution-development.html
3 .Gower, Principles of Modern Company Law, 4th Ed., p.7893
4 Companies Act, 2013, Section 272
Section 255 of the Insolvency and Bankruptcy Code, 2016 has been notified, which is affected
from the date ofNovember 15, 2016, and under Section 255 of the Act of 2013, stands amended
Schedule XI of the Code. The Schedule XI, as mentioned earlier, now defines the term 'winding
up' by introducing a new Section 2(94A) to the 2013 Act as 'winding up' under this Act or
liquidation under the Insolvency and Bankruptcy Code, 2016.

On a bare reading of the 'definition,' it shall be safe to conclude that winding up proceedings will
now be 'governed' by the provisions of the Act of 2013 as well as the Code of 2016. The other
significant changes under this introduced by the Code for the Act of 2013 including removal
provisions of the 'voluntary winding up' and winding up on the ground of 'inability to pay debts'
from the Act of 2013 as they now find a place under the Code.

Winding up by the Tribunal

Section 271 does not confer on any person the right to seek an order that a company shall wound
up. It confers the Court's power to pass an order of winding up in an appropriate case. According
to the ruling in Karnataka Vegetables Oils and Refineries Ltd. v. Madras Industrial Investment
Corporation Ltd.5, the court's discretionary power to issue a winding-up order under Section 433
of the Act of 1956 need not be utilised at the request of a single creditor. It should be mentioned
that the company will not be closed merely because it cannot pay its debts. The Court must take
into account all of the interests that are brought before it, not only the company's creditors.
Hence, the court must take into account all relevant circumstances, as well as the interests of the
company's shareholders, the company's rights, and any third party that may be impacted by such
a winding-up order.

Section 271 lays down that a Tribunal may order for winding up a company if a petition under
section 272 is presented to the Court, with any of the grounds provided under section 271. The
grounds provided therein are:

a. If the Company is 'unable to pay its debts'.

b. If the Company has resolved by 'special resolution' that the Tribunal wind the company
up.
c. If the Company has acted against the security of the State, interests of the sovereignty and
integrity of India, public order, friendly relations with foreign states, decency or morality;
d. If the Tribunal has ordered the company's winding up under Chapter XIX, which relates
to 'Revival Rehabilitation and Sick Companies.'
e. If on an application made by any other person, Registrar or Central authorized by the
Government by notification under this Act, the Tribunal is of the opinion that the affairs
of the company have been conducted in a fraudulent manner or the company was formed
for fraudulent and unlawful purpose or the persons concerned in the formation or
management of its affairs have been guilty of fraud, misfeasance or misconduct
connection in addition to that and that it is proper that the company be wound up;

5 AIR 1955 Mad. 582, 1954 24 Comp. Case 249 Mad.

 f. If the Company has made a default in filing with the Registrar its financial statements or
annual returns for immediately five preceding consecutive financial years;
g. If the Tribunal believes that it is just and equitable, the company should be wound up.

The ground (g) is very broad in its words. What is 'just and equitable' ground or cause calling for
winding up of a company will depend upon the facts, information, and circumstances of each
particular case. Such just and equitable grounds may be different from when the company's main
object had failed when the company proposed to acquire some running business, but the vendor
refused to sell it to the company.

Voluntary Winding up under Companies Act,2013:

A voluntary winding up of the company occurs when the members of the company agree to
dissolve the company in the general meeting by the Board of Directors. The voluntary Winding
up may be subdivided into:
a. Members voluntary winding up
b. Creditors voluntary winding up

The Companies Act 2013, from section 304 to 323, expressly and comprehensively provides the
mechanism of voluntary winding up of companies in India. It is a kind of dissolution of the
company wherein the members are free to wind up the company as per their decision, and no
interference or pressure is by a tribunal or by the Court per se. This is why it is known as the
voluntary Winding up of the Company, i.e., the company is dissolved at the volition of the
members, creditors, and officials.

It was held in Neptune Assurance Co. Ltd. v. Union of India6 that in the Companies Act, the
expression "voluntary winding up" means a winding up by a special resolution of a company to
that effect. Similarly, the expression "winding up by the court" means winding up by order of the
Court in accordance with Section 433 of the Companies Act, 1956.

6 .1973 SCR (2) 940

As mentioned above, the Companies Act, 2013 provided two methods for voluntarily winding up
the companies under Section 304, but this particular provision has been repealed by the
Insolvency & Bankruptcy Code, 2016.

Winding up Procedure under the Insolvency & Bankruptcy Code, 2016:

The Code of 2016 relating to Insolvency brought a paradigm shift from ‘debtor in possession’ to
the ‘creditor in control.’ It aims to consolidate all the laws in India relating to Insolvency and the
liquidation of insolvent corporate entities.
The most important Part of the said Code in Part II deals with the Insolvency and the liquidation
proceedings, which are to be tackled by the registered Insolvency resolution or insolvency
liquidation professionals under the supervision of the Court.
The Code provides that the liquidation occurs in the event of failure to submit the resolution plan
to the NCLT within the prescribed period of 180 days or 240 days7 or 135 Days8 or rejection of
resolution plan for non-compliance with the requirements of the Code, or decision of creditors
committee based on a vote of the majority, or contravention of the resolution plan by the
debtor."9 The Insolvency and Bankruptcy Code, 2016 further provides the liquidation of the
company in four scenarios as follows: Where the adjudicating authority is of the view that the
resolution plan does not meet the criteria set out under the Code, the resolution professional shall
examine each resolution plan received by him to confirm that each resolution plan:10
a. Provides for payment of the costs of the insolvency resolution process in a manner
determined by the Board as a priority for the repayment of other debt to the 'corporate
debtor';
b. . Provides for the 'repayment of the debts' of the operational creditors in the manner
prescribed by the Board and not less than the amount to be paid to the operational
creditors in the case of liquidation of the corporate debtor;11
c. . Provides for the management of corporate debtor affairs after the resolution plan's
approval;

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 d. Implementation and supervision of the resolution plan;
e. Doesn't conflict with any provisions of the law at present;
f. Comply with other requirements that the Board may identify.

Secondly, where the adjudicating authority does not receive the resolution plan after the expiry
of the period permitted for submitting the same.
Thirdly, where at any time before the confirmation of the resolution plan, the committee of the
creditors resolves by12 percent majority of the voting shares that the corporate debtor is to be
liquidated,13 and lastly, where the corporate debtor violates the terms of the resolution plan, and
on an application by a person whose interest is adversely affected by such violation, the
adjudicating authority determines that the corporate debtor has violated the terms as aforesaid.14
Suppose the adjudicating authority approves such an application for liquidation. In that case, it
shall be considered a moratorium on the initiation of any proceedings by or against the corporate
debtor except appeals in the Supreme Court or High Courts.15

Winding up of Different kinds of Companies:

The provisions for winding up apply to different kinds of companies. This includes Banking
companies, Sick companies, foreign companies, Defunct companies, Government companies,
Unregistered companies and the various cases are explained as under.

Winding up of Foreign Companies:

It is not necessary for a foreign company to have its registered office within the jurisdiction of
the court hearing the case in order to be wound up; it is sufficient to show that the firm has an
office, assets, or any liabilities that fall under the court's purview. Even if it might not have
established a physical location, it is still adequate if it conducted business in India.
Even while a winding up procedure is ongoing abroad, the presence of assets in the nation and
creditors usually indicates that business has continued.16

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16 Calcutta Jute Mills Ltd; ILR 5 Cal 888; Mercantile Bank of Australia in Re.(1892) 2Ch. 204
Such a "Government Corporation" may also be dissolved by an Indian court if it is a foreign
corporation in which the Government of India owns 51% of the shares.17 If a company only
conducts business through an agent, the court will not have the authority to wind it up; however,
if the director of a Russian company regularly visited England, stayed for a few days in a
Manchester hotel, and conducted business from there, that indicates the company has a place of
business in the nation and is subject to being wound up by the court of that nation.18
The Companies Act of 2013 contains specific provisions for winding up foreign companies. A
foreign company falls under the category of an unregistered company under Section 376 of the
Companies Act of 2013, and such corporations may be liquidated in accordance with the Act's
provisions. Only the Court, not voluntarily or just under the Court's supervision, may carry out
such winding up. However, sections stipulate that these specific measures must be in addition to
other laws relating to the Court's winding up and not as a replacement for them. It is widely
known that only India's properties and assets will be impacted by a winding up order.19

Winding up of Banking Companies:

In cases of such companies the special provisions in part 3 and 3-A of the Banking Regulation
Act will apply. There is no specific provision available in the Banking Regulation Act, 1949.
Hence for the Companies Act provisions will apply in the banking company for the procedure of
winding up.

Winding up of Defunct Companies:

The Companies Act has not defined a defunct company and this word is taken from the
dictionary. According to the Chambers 20th century dictionary the adjective and the meaning of
the defunct is having finished the course of life that is dead. Also, a dictionary of legal terms by
N M Dani defines that if anything is no longer in force use or extinct or not operating or not
functioning we can say that has defunct the meaning is same as dead.

17 Re.71 CWN 854 (1967) 2 Comp. L. J. 106

18 Tovarishetva Manufacture Ludvig rabenek, (1944) 2 All E. R. 556
19 E.V Davedson, Indian Law as Applicable to Corporations Incorporated Outside India, Vol. 16, No. 4, The
Business Lawyer, p. 1074 (1961).
The process of winding out defunct companies is explained in the circular that contains the
following from section 560 in the departmental policy. The department policy summarises that to
ascertain that if a company is defunct company we can see that from its latest available balance
sheet and it shows that it has sufficient recoverable asset and steps to move the company into
compulsory liquidation are raised but where the latest available balance sheet shows that
company has no assets for there is not any sufficient means to fulfil the cost of liquidation and
steps for already taken to strike their names of in the register under section 560, we can say that
company is defunct the striking of the name of a company does not always materially affect the
creditors of the company because such creditors may be fall on fake in nature:
a. In cases of defunct companies as per the act to enforce their claim against director,
secretaries and treasurer manager or any other officer20 of the company and even though
in some cases every member of the company as if the name of the company had not been
struck off; or
b. If any application is pending before the Tribunal for the winding of a company whose
name has been struck off;
c. Applied to the Tribunal at any time within twenty years from the date of publication of
the notice intimating that the company has been struck off in such cases the restoration of
the name of the company within Registrar of Companies and on such application being
made the Tribunal who is dealing with such companies may pass an order and instruct the
registrar of the companies that the name of the struck of if company can be restored

Winding up of Unregistered Companies:

Section 582 of the Companies Act, 1956 provided that any legal entity which is not registered in
accordance with the provisions of the said act may be construed as an unregistered company.
Further sub-section (1) of 583 of the Act governs unregistered companies winding up procedure
under the Companies Act, 1956. All the provisions of above mentioned Act with respect to
winding up shall apply to unregistered companies and it read with sub-section (2) of Section 583
of the Act and states that it is always deemed that if company is not registered it is unregistered
companies where its principal place of business is situated for the purpose of determining

20 In Re: Kalyanasundara Gounder And others v. Unknown on 17 April, 1946, (1946) 2 MLJ 241 100
territorial jurisdiction. There are various circumstances in which an unregistered company may
be wound up: i. If the 'Company' is dissolved, or has ceased to carry on business, or is carrying
on business only to wind its affairs; ii. If the Company is 'unable to pay' its debts; iii. If the
Tribunal is of the opinion that it is 'just and equitable,' the company should be wound up.

Winding up of Government Companies:

Under section 620 of the Act the Central Government has been empowered to exempt or modify
any Act provisions except provisions embedded in section 619 and 619-A, in relation to
government companies by notification made in gazette of Government of India. Sections 433 &
484 of the Act no exemption under gazette notification for the both type of winding up with
voluntary winding up and compulsory winding up it means that section 551 of the Act provides
for furnishing information on pending liquidation to the Central Government the cases of
provisions of winding up of any Government Companies in the form number 148 by the Official
Liquidator. A Government Company can be wound up either by the Tribunal or by the company
shareholder or creditors as the case may be under the foregoing legal provisions. A consequently
secured creditor of a Government Company who has that legal right to file a petition for the
winding up under sections 433 and 434 of the Act. It may directly apply for the winding up of
Government Company by invoking a section 484 of the Act to set a model example of speedy
completion of the winding up.