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    Final Final Presentation Transcript

    • Liquidator- Power, Duties and Appointment
      1
      Group-1, BM-B
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • Miscellaneous Powers of Liquidator
      Liquidator can exercise powers on the following occasions:
      15
    • Miscellaneous Powers of Liquidator
      Payment of a class or classes of creditor in full
      Compromise or arrangement with creditors
      Compromising any call, or liability to call, debt and any claim
      Settling all questions relating to or affecting the assets of the company or its winding up.
      • The liquidator may do so on mutually agreeable terms and take any security for the discharge of call, debt, liability or claim
      16
    • 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
    • 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
    • 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
    • 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
    • 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
    • Law The OB-I Way!!
      A perfectly solvent company may be wound up
      True
      False
      22
    • 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
    • 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
    • Committee of inspection should not consist of more than ___ members.
      5
      7
      12
      15
      25
    • 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
    • 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
    • In a voluntary winding up, the liquidator is not an officer of the court.
      True
      False
      28
    • The shareholder or creditors can sue a liquidator for the damages for delaying payments.
      True
      False
      False under certain conditions
      29
    • Thank You!!
      30