1. Liquidator- Power, Duties and Appointment 1 Group-1, BM-B

2. Winding Up Is a process whereby company’s life is ended and its property administered for the benefit of its creditors and members. Liquidator- An Administrator Similar to Insolvency of an Individual Compulsory v. Voluntary winding up 2

3. Appointment of Liquidator[Sec. 448] Official Liquidator attached to the High Court or District Court becomes the liquidator of the company Conducts winding up and other duties as Court may impose 3

4. Provisional Liquidator Appointment Court may appoint him after a petition is presented but before making a winding up order Before appointment, company should be given opportunity to make its representation Assets are in danger of being diverted/misapplied Non functioning state with debts accumulating Powers of a Provisional Liquidator Same as Official Liquidator unless restricted by Court His acts will stand valid even if defect in his appointment or qualifications is discovered afterwards 4

5. Powers of liquidator [Sec. 457] To institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company; 5

6. Powers of liquidator [Cont.] Case: Gleitlager(India) (P) Ltd v Killick Nixon Ltd. In computing the period for suits on behalf of the company, the period from the date of commencement of winding up to the date of the order and one year from the date of such order is excluded [S 458-A]. The extension is available only for suits on behalf of the company and not on behalf of the secured creditor 6

7. Powers of liquidator [Cont.] 2. To carry on the business of the company so far as may be necessary for the beneficial winding up of the company; 7

8. Powers of liquidator [Cont.] Case: Alexander Ward& Co. v Samyang National Co. This has been held to include the power to ratify acts which, when in being, the company would have the power to perform. Summons for the arrest of a ship on behalf of a company which was without directors at the time, were ratified by the liquidator. The ratification was held to be binding 8

9. Powers of liquidator [Cont.] 3. To sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels; Bank of India v Bharat Electrical Industries Ltd: confirmation of sale at a low price as against the original reserve price 3(i). to sell whole to the undertaking of the company as a going concern; 9

10. Powers of liquidator [Cont.] 4. To rise on the security of the assets of the company any money requisite; 5. To do all such other things as may be necessary for winding up the affairs of the company and distributing its assets. 10

11. Powers: Without the sanction To do all acts in the name and on behalf of the company and to execute all deeds, receipts and other documents and for that purpose he may use, when necessary, the company’s seal To inspect the records and returns of the company or the files of the registrar without payment of any fee To prove and claim in the insolvency of any contributory for any balance against his estate and to receive dividends 11

12. Powers: Without the sanction [Cont.] 4. Draw, accept or endorse any negotiable instruments on behalf of the company 5. To take out, in his official name, letters of administration on any deceased contributory and to so, in his official name, any other act necessary for obtaining payment of any money due from the contributory or his estate 6. To appoint an agent to so any business which the liquidator is unable to do himself 12

13. Powers: Without the sanction [Cont.] A liquidator : Can issue a notice to persons to submit SOA (Statement Of Affairs) Can call any person to record any statement Have separate bank account for each sale of proceed Has to present to the court twice a year accounts 13

14. Committee of Inspection Court can order its appointment to act with the liquidator The liquidator, within 2 months has to summon the creditors to decide its membership which is then confirmed in consultation with the contributories. In case of any conflict the matter goes to the court Maximum number of members is 12 and the quorum for meetings is one-third or 2 whichever is larger A seat becomes vacant if the member resigns, becomes insolvent or compounds or arranges with the creditors or is absent for more than 5 meetings consecutively without any prior notice 14

15. Miscellaneous Powers of Liquidator Liquidator can exercise powers on the following occasions: 15

17. Position of Liquidator A liquidator: Have to take into custody property of the company Keep proper books Keep money in special accounts in scheduled bank to be entitled “the liquidation account of…” Should not hold money for more than 10 days. A n Individual shareholder or creditor cannot sue him for delay of payments 17

18. Disclaimer of Onerous Property[Sec. 535] Onerous Property ≈ White Elephant Land burdened with covenants Shares in companies Unsaleable property Unprofitable contract Duty of the court to help liquidator to get rid of “Onerous Property” Case: RakaCorpn (P) Ltd. 18

19. Disclaimer of Onerous Property Should be in writing signed by the liquidator Made within 12 months of commencement of Winding up Disclaimer determines: Rights, Interests and Liability Does not impact the rights or liabilities of a person Person interested in a property can require a liquidator Notice to be given within 28 days by the liquidator Case: KaushalyaAggarwal v Punwire Paging Service Ltd. 19

20. Report by Official Liquidator The Official Liquidator submits a preliminary report to the Tribunal within 6 months of receiving the Statement of Affairs The report contains: Amount of issued and paid up capital Estimated amount of assets and liabilities If the company has failed, then causes of its failure His opinion regarding further inquiry on Promotion Formation Failure of the company Conduct of the business 20

21. Removal of Liquidator Liquidator is subject to the control of Tribunal Case: Dr. Hardit Singh Vs. ROC, 1978 If liquidator does not respond to a creditor’s claim and proofs, this is held to be dereliction of duty sufficient to merit removal Case: AmarNathKrishanLal Vs. Hindustan Forest Co. Ltd., 1993 A liquidator is not removable only on the ground that he was a shareholder or director or because the creditors or members in majority demand it Case: M. Knight and Co Ltd Vs. Montgomerie, 1892 21

22. Law The OB-I Way!! A perfectly solvent company may be wound up True False 22

23. Within ___ days of the date of winding up order, a Statement as to Affairs of the company has to be submitted to the official liquidator. 30 21 28 90 23

24. Liquidators can exercises following without sanction from the court To carry on the business of the company To sale moveable and immoveable property To inspect the records and returns of the company To raise the security of the assets of the company 24

25. Committee of inspection should not consist of more than ___ members. 5 7 12 15 25

26. Which of the following can be regarded as an onerous property Unprofitable contract Shares or stocks in the company Unsaleable property All of the above 26

27. When a person interested in property requires liquidator to decide disclaim on the property, the liquidator should provide a notice within ___ days. 28 21 60 30 27

28. In a voluntary winding up, the liquidator is not an officer of the court. True False 28

29. The shareholder or creditors can sue a liquidator for the damages for delaying payments. True False False under certain conditions 29

30. Thank You!! 30