Sections 271, 272 and 273 of the Companies Act, 2013: Winding Up by Tribunal

Section 271 - Circumstances in which a company may be wound up by Tribunal

Meaning: Section 271 specifies the grounds on which the NCLT may order winding up of a company on a petition presented under Section 272.

A company may be wound up by the Tribunal where:

1. the company has, by special resolution, resolved that it be wound up by the Tribunal;
2. the company has acted against the interests of the sovereignty and integrity of India, security of the State, friendly relations with foreign States, public order, decency or morality;
3. on an application by the Registrar or another person authorised by the Central Government, the Tribunal concludes that the affairs of the company were conducted fraudulently, the company was formed for a fraudulent or unlawful purpose, or persons involved in its formation or management were guilty of fraud, misfeasance or misconduct, and winding up is proper;
4. the company has defaulted in filing its financial statements or annual returns with the Registrar for the immediately preceding five consecutive financial years; or
5. the Tribunal considers it just and equitable that the company should be wound up.

Section 272 - Petition for winding up

Meaning: Section 272 identifies who may present a petition to the Tribunal and prescribes important conditions governing such petitions.

A petition may be presented by the company; one or more contributories; the persons falling within those categories together; the Registrar; a person authorised by the Central Government; or, for the national-interest ground in Section 271(b), the Central Government or a State Government.

A contributory may petition even where the shares are fully paid or the company has no assets or surplus assets, subject to the statutory shareholding requirements in Section 272. The Registrar requires previous sanction of the Central Government where the Act so requires, and the company must be given a reasonable opportunity to make representations before sanction is accorded.

A company presenting its own petition must comply with the prescribed statement-of-affairs requirement. A copy of the petition must also be filed with the Registrar, who is required to submit views to the Tribunal within the statutory period. Section 272 should be read in its current amended form for the detailed conditions applicable to petitions, including provisions concerning creditor petitions.

Section 273 - Powers of Tribunal

Meaning: Section 273 sets out the principal orders the NCLT may make after receiving a winding-up petition under Section 272.

The Tribunal may dismiss the petition with or without costs, make an interim order, appoint a provisional liquidator until a winding-up order is made, order winding up with or without costs, or make another order it considers fit. The section provides a ninety-day period for making an order on the petition.

Before appointment of a provisional liquidator, notice and a reasonable opportunity to make representations must ordinarily be given to the company. The Tribunal may dispense with notice for special reasons recorded in writing. A winding-up order cannot be refused merely because the company's assets are fully or excessively mortgaged, or because the company has no assets.

Where the petition relies on the "just and equitable" ground, the Tribunal may refuse winding up if another remedy is available and the petitioners are acting unreasonably in seeking winding up instead of pursuing that remedy.