1) A liquidator is appointed to wind up a company's affairs and administer its assets for the benefit of creditors and shareholders. The liquidator's powers include instituting legal proceedings, carrying on the company's business, and selling the company's property and assets. 2) A provisional liquidator may be appointed before a winding up order if the company's assets are at risk of being diverted or if the company is non-functioning with accumulating debts. 3) The liquidator can disclaim onerous property like unprofitable contracts or unsaleable assets within 12 months to relieve the company of future obligations or losses.

1. Liquidator- Power, Duties and Appointment1Group-1, BM-B

2. Winding UpIs a process whereby company’s life is ended and its property administered for the benefit of its creditors and members.Liquidator- An AdministratorSimilar to Insolvency of an IndividualCompulsory v. Voluntary winding up2

3. Appointment of Liquidator[Sec. 448]Official Liquidator attached to the High Court or District Court becomes the liquidator of the companyConducts winding up and other duties as Court may impose3

4. Provisional LiquidatorAppointmentCourt may appoint him after a petition is presented but before making a winding up orderBefore appointment, company should be given opportunity to make its representationAssets are in danger of being diverted/misappliedNon functioning state with debts accumulatingPowers of a Provisional LiquidatorSame as Official Liquidator unless restricted by CourtHis acts will stand valid even if defect in his appointment or qualifications is discovered afterwards4

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 creditor6

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 binding8

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 price3(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 sealTo inspect the records and returns of the company or the files of the registrar without payment of any feeTo prove and claim in the insolvency of any contributory for any balance against his estate and to receive dividends11

12. Powers: Without the sanction [Cont.]4. Draw, accept or endorse any negotiable instruments on behalf of the company5. 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 estate6. To appoint an agent to so any business which the liquidator is unable to do himself12

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 statementHave separate bank account for each sale of proceedHas to present to the court twice a year accounts13

14. Committee of InspectionCourt can order its appointment to act with the liquidatorThe 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 courtMaximum number of members is 12 and the quorum for meetings is one-third or 2 whichever is largerA 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 notice14

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

16. Miscellaneous Powers of LiquidatorPayment of a class or classes of creditor in fullCompromise or arrangement with creditorsCompromising any call, or liability to call, debt and any claimSettling 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 claim16

17. Position of LiquidatorA liquidator:Have to take into custody property of the companyKeep 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 ElephantLand burdened with covenantsShares in companiesUnsaleable propertyUnprofitable contractDuty of the court to help liquidator to get rid of “Onerous Property”Case: RakaCorpn (P) Ltd.18

19. Disclaimer of Onerous PropertyShould be in writing signed by the liquidatorMade within 12 months of commencement of Winding upDisclaimer determines:Rights, Interests and LiabilityDoes not impact the rights or liabilities of a personPerson interested in a property can require a liquidatorNotice to be given within 28 days by the liquidatorCase: KaushalyaAggarwal v Punwire Paging Service Ltd.19

20. Report by Official LiquidatorThe Official Liquidator submits a preliminary report to the Tribunal within 6 months of receiving the Statement of AffairsThe report contains: Amount of issued and paid up capitalEstimated amount of assets and liabilitiesIf the company has failed, then causes of its failureHis opinion regarding further inquiry onPromotionFormationFailure of the companyConduct of the business20

21. Removal of LiquidatorLiquidator is subject to the control of TribunalCase: Dr. Hardit Singh Vs. ROC, 1978If liquidator does not respond to a creditor’s claim and proofs, this is held to be dereliction of duty sufficient to merit removalCase: AmarNathKrishanLal Vs. Hindustan Forest Co. Ltd., 1993A liquidator is not removable only on the ground that he was a shareholder or director or because the creditors or members in majority demand itCase: M. Knight and Co Ltd Vs. Montgomerie, 189221

22. Law The OB-I Way!!A perfectly solvent company may be wound upTrueFalse22

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.3021289023

24. Liquidators can exercises following without sanction from the courtTo carry on the business of the companyTo sale moveable and immoveable propertyTo inspect the records and returns of the companyTo raise the security of the assets of the company24

25. Committee of inspection should not consist of more than ___ members.57121525

26. Which of the following can be regarded as an onerous propertyUnprofitable contractShares or stocks in the companyUnsaleable propertyAll of the above26

27. When a person interested in property requires liquidator to decide disclaim on the property, the liquidator should provide a notice within ___ days.2821603027

28. In a voluntary winding up, the liquidator is not an officer of the court.TrueFalse28

29. The shareholder or creditors can sue a liquidator for the damages for delaying payments.TrueFalseFalse under certain conditions29

30. Thank You!!30