Winding Up by the Tribunal under the Companies Act, 2013

Winding up by the Tribunal is a compulsory process — the company does not choose it for itself; rather, it is ordered by the National Company Law Tribunal (NCLT) after hearing a petition. It is the only form of winding up that still remains within the Companies Act, 2013 today (voluntary liquidation, as explained above, has moved to the IBC).

Grounds for winding up by the Tribunal — Section 271. A company may be wound up by order of the Tribunal, broadly, on the following grounds:

• The company itself has, by a special resolution, resolved that it be wound up by the Tribunal.
• The company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality.
• On an application by the Registrar (or a person authorised by the Central Government), the Tribunal is satisfied that the company's affairs have been conducted in a fraudulent manner, or the company was formed for a fraudulent or unlawful purpose, or the persons who formed or managed it have been guilty of fraud, misfeasance or misconduct, and it is proper that the company be wound up.
• The company has made a default in filing its financial statements or annual returns with the Registrar for five consecutive financial years.
• The Tribunal is of the opinion that it is "just and equitable" that the company should be wound up — a broad, residual ground used, for example, where there is a complete deadlock in management, or the very purpose ("substratum") for which the company was formed has failed.

Note that "inability to pay its debts", which used to be a ground for compulsory winding up under the earlier law, is no longer treated as a Companies Act winding-up ground in the same way — a genuinely debt-defaulting company is instead dealt with through the Corporate Insolvency Resolution Process under the IBC, which can itself end in liquidation of the company.

Who may petition. A petition for winding up may ordinarily be presented by the company itself, by a creditor (including a contingent or prospective creditor), by a contributory (a person liable to contribute to the assets on winding up, generally a member/shareholder), by the Registrar, or, on the sovereignty/security ground, by the Central or State Government.

Powers of the Tribunal on hearing the petition. On hearing a winding-up petition, the Tribunal may dismiss it, make an interim order, appoint a provisional liquidator until a winding-up order is made, order that the company be wound up, or make any other order it thinks fit — including directing that the matter be settled outside a formal winding up wherever the company's affairs can genuinely be revived instead. …