Level 1: CA Final Law – Part I – Sec A – Chapter 7 – Winding Up MCQs

which of the following is a circumstances in which company may be wound up by tribunal.

Company may make a petition under section 272 for winding up to the _____

An order under this section 272 shall be made within how many days from the date of presentation of the petition

Tribunal shall make an order to direct the company to file its objections along with statement of its affairs within how many days of the order.

When can an application be made to Tribunal for constitution of a winding up committee to assist and monitor the progress of liquidation proceedings by the Company Liquidator in carrying out the function?

Provisional liquidator shall file a declaration within how many days from the date of appointment in the prescribed form disclosing conflict of interest or lack of independence in respect of his appointment to the tribunal.

In the case of a listed company who shall intimate about such the appointment of provsional liquidatior or winding up order, as the case may be, to the stock exchange or exchanges where the securities of the company are listed under section 277.

When can a winding up order not be called a notice of discharge?

Who shall make an application to the Tribunal for constitution of a winding up committee to assist and monitor the progress of liquidation proceedings by the Company Liquidator in carrying out the function?

Where the Tribunal has made a winding up order or appointed a Company Liquidator, such liquidator shall, within how many days from the order, submit to the Tribunal.

Infra Ltd. was winded up by an order of Tribunal dated 10th March, 2019 by the Tribunal. The appointed
official liquidator of the company noticed that the MD of the Infra Ltd. had sold certain properties
belonging to the company to a Supra Pvt. Ltd. in which his brother was interested on 15th October, 2018.This caused loss to the Infra Ltd. to the extent of INR 60 lakhs. Examine the course of action, the official liquidator can take in this matter.
(1) The official liquidator can recover the sale of assets of the company as per the Section 328 of the
Companies Act, 2013
(2) The transaction made will be regarded as invalid and restore the position of the company.
(3) This transaction made will be regarded as valid as being made under ordinary course of its business.

The Tribunal while passing an order of winding up of a company, for advising the company liquidator and to report to the Tribunal on winding up matters may direct for constitution of _____________

What is the periodicity of submission of report by company liquidator with respect to the progress of winding up of the company to the Tribunal.

Mr. Sameer, holding 15% shares of Towe Ltd., an unlisted company, since 30th September 2019, is unpaid to the extent of Rs. 10 lakh, filed a petition with Tribunal on 5th April, 2020, for winding up of Towe Ltd.
and a copy of the same was filed with Registrar of Companies (ROC). The Registrar of Companies (ROC) submitted his views to the National Company Law Tribunal (NCLT) on 18th May, 2020. The ROC mentioned in his views that it was just and equitable that Towe Ltd. should be wound up, on analyzing the information available with him with respect to the affairs of Towe Ltd.The Tribunal appointed provisional liquidator, Mr. Raj, on 20th May, 2020, without giving, notice of the same as well as without affording opportunity for making representations, to the company. Mr. Raj is registered as an insolvency professional under the Insolvency and Bankruptcy Code, 2016 and he filed the declaration with respect to his independence to the Tribunal on 25th May, 2020 Tribunal passed its order for winding up of Towe Ltd. on 16th June, 2020 and the provisional liquidator, Mr. Raj was appointed as the Company Liquidator. The Tribunal directed Mr. Sameer to deposit an amount of Rs. 1 lakh as security for costs as a precondition to issue directions to Towe Ltd.
The intimation thereof, of passing such order was sent to Mr. Raj as well as to the Registrar of Companies,
by the Tribunal. The ROC on receipt of such order from Tribunal made an endorsement to that effect in his records relating to Towe Ltd. and also made a notification in the Official Gazette that such order of winding up has been made by the Tribunal.
Mr. Raj calculated that the outstanding liabilities and debts of Towe Ltd. which amounted to Rs. 70 lakh
and the expenses of winding up were estimated at Rs. 3 lakh. Towe Ltd. has at present 8 members which
are holding shares unpaid to the extent of Rs. 40 lakh, in total. Following were the past members of the
company:- (1) Mr. Kishan ceased to be member on 23rd March, 2019, from whom Towe Ltd. had unpaid calls on shares amounting to Rs. 8 lakh. At the time when, Mr. Kishan ceased to be a member, the outstanding liabilities of the company were only Rs. 5 lakh.
(2) Mr. Dhawan ceased to be member on 28th May, 2019, from whom Towe Ltd. had unpaid calls on
shares amounting to Rs. 16 lakh. At the time when, Mr. Dhawan ceased to be a member, the
outstanding liabilities of the company were only Rs. 13 lakh.
(3) Mr. Tanmay who ceased to be member on 17th June, 2019, was having unpaid calls on shares of Towe Ltd. amounting to Rs. 15 lakh. At the time when, Mr. Tanmay ceased to be a member, the outstanding
liabilities of the company were only Rs. 10 lakh.
Towe Ltd. created a floating charge, as agreed, on the stock of the company on 23rd August, 2019, to
secure a current account with Munim Bank which was in debit by Rs. 12 lakh from 1st May, 2019 and There
after the bank also advanced Rs. 15 lakh on 1st September, 2019, for meeting the operating expenses of the company.
Munim Bank charged Rs. 1,18,500 as interest for financial year ended on 31st March, 2020, by debiting the said current account of Towe Ltd. on the total amount of Rs. 27 lakh (Rs.12 lakh + Rs. 15 lakh). Towe Ltd. remained solvent during the financial year 2019-20.
1. Whether Mr. Sameer was eligible to file petition for winding up against Towe Ltd.?

What was the last date available with ROC to submit his views to NCLT on the petition filed by Mr. Sameer and with the NCLT to pass order for winding up, respectively?

Whether the act of Tribunal can be considered valid for not giving notice of appointment of provisional liquidator, Mr. Raj as well as opportunity for making representations, to Towe Ltd.?

How much amount, Mr. Kishan, Mr. Dhawan and Mr. Tanmay, would be liable to pay as a contributory, if in case tribunal calls past members to satisfy the contributions?

How much amount of floating charge created on the stocks of Towe Ltd. shall be valid and how much of interest shall be allowed if no other rate is notified by the Central Government, other than the rate
of interest prescribed in the Act?

Binny Textiles is a company incorporated in the year 2010. It is a company limited by shares. The company has twelve Directors including Mr. Singh, who is a Managing Director of the company. The petition for winding up was presented by the contributories to the tribunal on the grounds of mismanagement and fraud committed by two of its Directors in the company. Mr. Rohan and Mr. Sharad are sons of late Mr. Ram who died three months ago. Mr. Ram held 500 shares of the company for the past 4 years. The value of each share is ₹ 2000. They both inherited equal amount of shares after his father’s death. So, as being shareholders of the company, they have also signed the petition for winding up of the
company. On being satisfied, the Tribunal passed the order for winding up of the company.
Due to the winding up of the company, the company decided to compensate Mr. Singh for loss of his office, as otherwise he would have retired in 2022, had the company not wound up. The company decided to pay one year remuneration, which he would have earned if he had been in the office for the remainder of his term. So, finally the company decided to pay Mr. Singh, after settlement of all the debts. As per the provisions of the Companies Act, 2013, the tribunal need to send an intimation of winding up to the liquidator and the registrar within a stipulated time mentioned in the Act. So, for the purposes of winding up of a company, the Tribunal appointed a Company Liquidator, Mr. Dilip, on 21st December,
2020. But Mr. Dilip had conflict of interest with the company. So, as per the provisions of the said Act, on appointment as a Liquidator, he filed a declaration from the date of his appointment in the prescribed form disclosing the conflict of interest in respect of his appointment, with the Tribunal.
As per Section 281 of the Companies Act, 2013, the Liquidator of the company, submitted to the Tribunal, a report containing the following particulars, namely:— CONTENTS OF LIQUIDATOR’S REPORT • The nature and details of the assets of the company including their location and value, stating separately the cash balance in hand and in the bank, if any, and the negotiable securities, if any, held by the company. The valuation of the assets shall be obtained from registered valuers for this purpose. The nature and details of the assets of the company including their location and value, stating separately the cash balance in hand and in the bank, if any, and the negotiable securities, if any, held by the company.
• Amount of capital issued, subscribed and paid-up.
• The existing and contingent liabilities of the company including names, addresses and occupations of its creditors, stating separately the amount of secured and unsecured debts.
• All the details of secured debts including their value and the dates on which they were given. • The debts due to the any company or persons from whom they are due and the amount likely to be realised on account thereof.
• Guarantees, extended by the company.
• List of contributories and dues, if any, payable by them and details of the unpaid call
• Details of subsisting contracts.
• Details of legal cases filed by or against the company. The Liquidator finally submitted all the documents to the Tribunal. The Tribunal settled a list of contributories and cause rectification of register of members in all cases where rectification is required in pursuance of this act. The Tribunal reviewed all the assets of the company to be applied for the discharge of this winding up liability. While settling the list of contributories, the Tribunal included every person, who is or has been a member and who shall be liable to contribute to the assets of the company an amount sufficient for payment of the debts and liabilities and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, subject to the provisions of the Act. Out of total 1000 members, 500 members have paid only 50% of the amount of their shares. The company
can clear its entire debt, if the unpaid amount is received from these 500 shareholders.
2/3rd of such share-holders paid their remaining contributions towards their share consequent to which the remaining 1/3rd share holders decided for not paying the unpaid amount on the shares held by them.
1. Mr. Rohan and Mr. Sharad both signed the petition of winding up, as the contributories of the company. According to the provisions of the Companies Act, 2013, whether they were eligible to sign the petition?

Do you think the amount paid by 2/3rd of the 500 shareholders will absolve the remaining 1/3rd shareholders from their liabilities?

The company decided to compensate the loss which Mr. Singh has to bear for the loss of his job as the Managing Director of the company. Is the company justified in giving compensation to Mr. Singh?

Mr. Dilip had some conflict of interest with the company. So, by what date he should file declaration with the tribunal.

What is the role of registrar on receipt of intimation order from the tribunal for winding up of the company?

XYZ Limited is being would up by the tribunal. All the assets of the company have been charged to the company’s bankers to whom the company owes Rs 5 crores. The company owes following amounts to others:
• Dues to workers – Rs 1,25,00,000
• Taxes Payable to Government – Rs 30,00,000
• Unsecured Creditors – Rs 60,00,000
You are required to compute with the reference to the provision of the Companies Act, 2013 the amount each kind of creditors is likely to get if the amount realized by the official liquidator from the secured assets and available for distribution among creditors is only Rs 4,00,00,000/-.