Winding Up

Winding up is a term commonly associated with the ending of company's existence .

In fact, winding up 1 is a process by which the assets of the company are collected and
realized, its liabilities are discharged and the net surplus, if any, is distributed in
accordance with the company's articles of association.2

Prof. L. C. B Grower has defined Winding up of a company as "a process whereby

its life is ended and its property administered for the benefit of its creditors and
members. An Administrator called a Liquidator', is appointed who takes control of
the company, collects its assets, pays its debts and finally distributes any surplus
among the members in [Link] their rights". 3

Thus, in the words of Pennington, "winding up or liquidation is the process by

which the management of a company's affair is taken out of its directors hand, its
assets are realized by a liquidator, and its debts and liabilities are discharged out of
the proceeds of realization and any surplus of assets remaining is returned to its
members or shareholders. At the end of the winding up the company will have no
assets or liabilities, and will therefore be simply a formal step for it to be dissolved,
that is its levl personality as a corporation to be brought to an end." 4

It must, however, be pointed out that a company is not dissolved immediately at

the commencement of winding up. Its corporate status and powers continue the
process of winding up. In fact, "winding up precedes dissolution". when the winding
up of the company commences, it is said to be in liquidation, but it does not cease to
exist until dissolved.

The object of winding up a company is to realize the assets and pay the debts of
the company expeditiously in a fair manner in accordance with the law.

Winding Lip , of a cornpanyis different from the insolvency . of an individual because

the company can never be declared insolvent under the Insolvency Act,. even though it_
is unable to. Pay its cte Ptitcan only be wound up. 5

Winding up [Section 270]:

1
winding up' and liquidation' are synonymous terms, they may, therefore, be interchangeably used for one another.
2
Dr. N.V. Paranjape, The New Company Law,2013, (6th ed) p.488.
3
Gower, The Principles of Modern Company Law, (4th ed) P. 719.
4
Pennington's, Company Law, (5 th ed) p. 839.
5 y
A tar Singh, Business Law 2014, (10th ed) p.720.
The Companies Act, 1956 has prescribed three modes of winding up of a company,
namely,

1. By court,

2. Under supervision of the court, and

3. Voluntary winding up, which may be:

(a) Member's voluntary winding up or (b) creditor's voluntary winding up.

However, the Companies Act, 2013 prescribes only two modes of winding up:

1. Winding up by the Tribunal;

2. Voluntary winding up.

The companies Act of 2013, does not acknowledge the distinction between
member's voluntary winding up and creditor's voluntary winding up.

Winding up by Tribunal [section 2711: 6

The compulsory winding up of a company which is also called winding up by the Tribunal,
is initiated by an application by way of petition to the Tribunal for a winding up
order. The circumstances under which a company may be wound up by the Tribunal
in its discretion to order the winding up of a company are stated in section 271 of the
companies Act, 2013. They are as follows:

(a) Inability to Pay Debts [section 271 (a)]:

Firstly, a company may be ordered to be wound up if it is unable to pay its debts. 7 A

company is deemed unable to pay its debts if a creditor for an amount exceeding one
lakh rupees does not get his money within twenty-one days (3 weeks) after it fell due,
and the creditor is entitled to make a petition to the tribunal for an order of
winding up of the company. The debt must, however, be really due and not under
dispute. 8 Where a financially sound company disputed the claim on bona fide
grounds, that was held not to be a neglect to pay and the Tribunal refused to make an
order for winding up of the company.

The Tribunal does not allow this remedy to be used as a shortcut or cheap device to
6
Section 433 of the Companies Act, 1956.
7
The expression "unable to pay debts" has to be taken in commercial sense of
being unable to meet current demands though the company may be otherwise
solvent.
8
Vijay Industries v NATL technologies Ltd, (2009)3 SCC 527.
coerce payment of a disputed debt. The power is discretionary. The Supreme Court
pointed out in Madhusudan Gordhandas & Co V. Madhu Wollen Industries (P) Ltd, 9
that in the exercise of its discretion the Tribunal can take all the relevant factors into
account including the wishes of Creditors, the benefit that will accrue to the
petitioners and the nature of the debt.

Secondly, a company is unable to pay its debts if execution or any other

process issued on a decree against the company is returned unsatisfied in
whole or in part.

Lastly, if the Tribunal is satisfied that the company is unable to pay its debts, that is, the
company is commercially insolvent. 10 In Krishnamsetty Basav Rao V Kubashi
Machine Tools (P) Ltd., 11 the Andhra Pradesh High Court (now Tribunal) held
that order of winding up besides being discretionary, has to be resorted as a last
measure when it is in the interest of not only the company but also public. In the
instant case, the court (now tribunal) declined to exercise such discretion in favour of
petitioners, who had come up before the court (now Tribunal) with ulterior motive and
not in the industrial unit, and were seeking winding up of the unit. In Jagdamba
Polymers Ltd. V Neo-Sack Ltd., 12 The Tribunal of Madhya Pradesh observed that
there is a rule of caution not to entertain petitions of winding up unless a very
strong prima facie case is made out on facts else it affects the very existence of
company in commercial market. It will be too disastrous for any running company to
suffer an order of winding up for non- payment of debt and that too when it has
certain bona fide reasons not pay the debt. In Global Polymers & lmpex Ltd V Dan-
Injeet Aps. Denmark. 13, The Tribunal observed that winding up of company is not a
matter of right but is a discretionary remedy. The proper course for recovery of
amount of debt is to file a civil suit. Hence Tribunal could not convert proceedings
of winding up in proceedings for recovery alike civil suit to decide company's
liabilities to pay.

9
(1971) 3 SCC 632: AIR 1971 SC 2600. IBA Health (I) (P) Ltd VInfo- Drive systems Sdn Bhd, (2010)10
SCC 553.
10
"Commercial insolvency" that the assets and liabilities are such as to make it
reasonably certain that the existing and the probable assets would be insufficient to
meet the existing liabilities.
11
IV (2005) BC 324 (AP).
12
III (2004) BC 346 MP.
13
I (2004) BC 415 (MP).
If there is a reasonable prospect of resurrection and revival of a company and its
effective and commercially successful functioning, Tribunal may not pass winding
up order. However, there may be instances where winding up may be more
effective way of settlement for the creditors and even the shareholders to recover
whatever could be salvaged from the assets of the company. That will really be so
in the case of the companies whose continuance would not be commercially viable
and may result in incurring further commitments by way of avoidable overheads.
In such a case, there would be no purpose in trying to keep alive the company and
allow it to continue its uneconomic functioning. That will only result in creating
further liabilities against the company necessarily causing corresponding reduction
in the distributive assets? 14

It must, however, be noted, that the Tribunal is not expected to direct

continuance of the functioning of the company in each and every case. The matter
has to be decided applying the following tests:

1. Whether continuance of the functioning of the company would be in the best

interests of
the creditors primarily.

1. Whether revival and resurrection of the company would be possible, especially

taking into consideration the circumstances such as (i) degree of insolvency; (ii)
likelihood of confidence of customers in view of its past performance etc.

2. Whether the continued functioning would not result in reducing the reliable
assets, but
would enable the company to function normally and economically.

3. If there is a scheme before the Tribunal and whether it could be implemented

and feasibility
of its success.

4. If resurrection is proposed, the initial outlay and recurring expenditure on that

account and the availability of resources for the same and whether such re-
commencement of business of the company is likely to further reduce the
distributable assets of the company. 15
14
Supra, Note.,2. P. 491.
15
The above guidelines may not serve as a precise mathematical formula to determine the viability of revival
of continuance of functioning of a company. An overall view of the circumstances of the case may enable the
 5. In Dr. Pritsch Machines & Powders (P) ltd. Octahedron Superabrasives
(P) Ltd., 1 6 the petitioner filed a suit against respondent for his failure to pay the
debt under section 394 of the companies Act, 1956 (section 271 of the 2013
Act). But the High court of Delhi dismissed the petition as no case was made out
against the respondent company. The evidence on record showed that the
respondent has issued post- dated cheques in favour of the petitioner which
were never encashed by the petitioner and no explanation was given as to why
these cheques were not presented. Petitioners reluctance and failure to the
cheques the case of respondent company. Moreover, the alleged debt was not
debt and the respondent company has disputed the claim of the petitioner
company. Therefore, there was no merit in the case and the High Court
rightly declined to entertain petition for winding up under section 433 (e)
of the Companies Act, 1956 (Section 271 (1) (a) of the Companies Act, 2013).

From the above analysis, it may be summed that inability to pay debts on the
part of the company is usual ground for filing the petition for winding up of
the company However, every debt cannot be ground for winding up of the
company. A company may be wound up on the ground of being unable to pay
its debts only when the following conditions exist:

(a) The amount of debt exceeds one lakh rupees;

(b) The sum must be definite, presently payable and there should be no
bona fide dispute about the debt;

(c) The creditor makes a written demand of payment;

(a) The demand is signed by the creditor or his agent or legal advisor duly
authorized on this behalf;

(b) The demand has been serving by causing it to be delivered at the

registered office by registered post or otherwise; and

(c) The company must have neglected to pay the demanded sum or to secure
or compound the same to the satisfaction of the creditor for three weeks.

(b) Special Resolution 'section 271 (b)]:

Tribunal to reach a correct decision whether it will be in the interests of the creditors to approve the scheme for
revival rather than affirm the warrant of death of the company.
16
(2011) BC 532 (Del).
A company may be wound up by an order of the Tribunal if a special resolution
for its winding up has been passed by the company. The Tribunal is, however, not
bound to order winding up simply because the company has so resolved. 17 The power
of the Tribunal being discretionary, it may not be exercised if the winding up is
opposite to the public interest or the interests of the company. It must be pointed out
that winding up by a special resolution is not a common occurrence because of the
fact that companies generally have a very large number of shareholders and if
they want the company to be wound up, they would prefer its voluntary winding
up which is comparatively cheaper and less time consuming. It is quite often
noticed that companies which are in very bad financial position and confronted
with the problem of income tax or sales tax defaults, protracted litigation with
creditors and prosecution by Registrar of companies etc., prefer compulsory
winding up by the Tribunal by passing special resolution so that all these problems
are passed on the official liquidator and the company's burden is considerably
reduced.

(c) Where company has acted against National interestIsection 2711c1):

The Tribunal has power under section 271 (c) of the companies Act, 2013 if it is
found that 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

(d) Winding up of Sick companies jsection 271 MI;

Where on demand by more than fifty per cent of secured creditors apply to the
Tribunal for winding up of the company with relevant evidence for its failure to
offer security, or compound it, the Tribunal may pass an order for winding up of
the company under chapter XIX of the companies Act, 2013, which relates to revival
and Rehabilitation of Sick Companies.

(e) Winding up on application made by Registrar [section 271 (en)]

If an application made by the Registrar of the companies of (ROC) or any other

person authorized by the Central Government by Notification under this Act, the
Tribunal is of the opinion that the affairs of the company have been conducted in a
17
Section
fraudulent manner or the company has been formed for a fraudulent or unlawful
purpose or persons concerned in the formation or management of its affairs have
been guilty of fraud, misfeasance or misconduct in connection therewith and that it
is proper that the company may be wound up.

(f) Default of company in filing with Registrar its financial statement [Link] 271
(If)]

Where the company has made the default in filing with the Registrar its financial
statements or annual returns for immediately preceding five consecutive years, the
Tribunal may order winding up of the company.

Where a company has not commenced its business within one year from the
date of its incorporation, or has suspended its business for a whole year, it may
be ordered to be wound up. The power of the Tribunal being discretionary, it will
not be exercised unless there are indications that the company has no intention to
commence or continue its business. If the suspension of business is due to some
temporary or unavoidable reason, the Tribunal may refuse to order winding up.
Again the petition for winding up would not be allowed if the delay in
commencement or suspension or interruption of business is duly explained and if
the Tribunal is satisfied that the business could not be commenced or resumed
for a valid reason. In Reserve Bank of India V. Al Farah Finlease Ltd., 1 8 a non-
banking Financial corporation (NBFC) was required to obtain registration from
Reserve Bank of India for commencement of its business and there was rejection
of application by the RBI because of serious irregularities noticed or inspection
of books and accounts which included acceptance of deposits and peculiar
method adopted for unauthorized conversation of same into shares, bouncing of
large number of cheques etc. Official Liquidator was appointed as Provisional
Liquidator. The Tribunal, therefore, considered its first concern to ensure that all
depositors, shareholders or creditors are duly paid by the company for which it
was necessary to have complete picture in this behalf. Hence, the Tribunal directed
the company to file detailed affidavit indicating the list of all shareholders,
depositors/investors etc. whose claims were settled in Court of Metropolitan
Magistrate and also list of those whose claims were yet to be settled and steps
taken by the Metropolitan Magistrate in this behalf.
18
I (2006) BC 267 (Del).
Reduction in membership below statutory limit may also lead to winding up of a
company by the Tribunal. If the number of members of the company is reduced below the
prescribed statutory limit, namely, in the case of public company, , below seven and in the
case of private company below two, the company may be ordered to be wound up. 19 The
Tribunal usually does not order winding up on this ground but leaves it to the
company to go into voluntary winding up. This ground for winding up is meant to
enable the member to escape personal liability for the company's debts which he
would have otherwise incurred if the membership remains below the statutory
nninimumfor more than six months as provided in the companies Act, 2013.

(d) Just and Equitable' cause:

Section 433 (f) of the companies Act, 1956 provides that the court can order the
winding up of a company, when it is of the opinion that it is just and equitable that
the company should be wound up 20

Similarly, section 271 (1) (g) of the companies Act, 2013 provides that the
Tribunal can order winding up of the company when the Tribunal is of the opinion
that it is just and equitable that the company should be wound up. It is the remedy of
the last resort. In this case, the Tribunal has the wide powers and has complete
discretion to decide when it is 'just and equitable' to order winding up of the
company. The discretionary authority of the Tribunal even enables it to subject
the exercise of the illegal rights to equitable considerations. 21 The discretion of the
Tribunal under this clause is very wide and the courts have exercised this discretion
on a variety of grounds which may be generalized in the following categories:

Firstly, 22 when there is deadlock in the management of the company, the Tribunal
may order winding up on just and equitable ground. This occurs when only the two
members of the company are not on speaking terms. Mere dispute is not enough. In
Re Yenidje Tobacco Co, Ltd., 23 is an illustration in this point.

In the instant case, two cigarette manufacturers W and R who were trading separately,
agreed to amalgamate their business by forming a private limited company of which
19
The term 'members" in this clause refers to actual member, and does not include past members or legal
representatives of deceased members or assignees of insolvent members
20
Avtar Singh, Company Law 2007 (15 th ed) p. 658.
21
The expression, 'Just and equitable' is general in nature and it is
undesirable to attempt to define the circumstances in which it will apply.
22
Supra, Note 5., P.722.
23
(1916) 2 Ch 426.
they were the only shareholders and directors. They have equal voting rights and
therefore their disputes were to be resolved by arbitration, but one of them
dissented from the award, They become so hostile that they were not even on
speaking terms with each other. Thus, there was a complete deadlock and, therefore,
the company was ordered to be wound up although its business was flourishing well.

The High Court of Delhi in Brown Foreman Mauricous Ltd., V Jagjit Brown Foreman
(India) Ltd, & others., 24 held that the winding up of the company under section 271
(1) (g) of companies Act, 2013 is not based on any statutory measures instead it
essentially depends on the equitable discretion of the Tribunal, for which the Tribunal
generally takes into consideration the following facts:

1. The conduct of the petitioner;

2. The possible effect of winding up on the concerned company, its shareholders,

members, creditors, employees etc;

3. Whether the petitioner himself is not responsible to create a situation for

winding up of the company;

4. The Tribunal is expected to invoke the provision of clause (2) of section 273
of the companies Act, 2013 in rare cases and order winding up only when no
better alternative is left for the parties.

Secondly, where the company has lost its substratum:--- The substratum of the
company is deemed to have been lost where:

A. Subject-matter of the company is gone; or

B. The main object for which the company was formed failed to materialize;

C. It is impossible to carry on the business of the company except at a loss; or

D. The existing and the possible future assets are insufficient to meet the
liabilities of the company.

When the main object of the company has failed to materialize or its substratum has
failed. This occurred when a company incorporated to work a German patent could not
obtain it, or when a company's assets were seized by the creditor. Temporary
acquisition or difficulty is not the same thing.

24
(2003) (CC2) GJX 0240 (Del).
 Thirdly, Mismanagement and Losses: The Tribunal is justified in ordering winding up
of the company under the 'just and equitable' clause where it is not possible for the
company to carry on business except at losses and there was no prospects of
achieving profits. However, mere apprehension of losses on the part of shareholders is
no ground for winding up under this cluase.

Where due to the mismanagement in the company its share capital is constantly
decreasing and it is running into heavy losses, the Tribunal may order it's winding up.
In Rajmundry electric supply corporation Ltd. V. A Nageshwar Rao., 25 there was
mismanagement in the company and most of the capital was used by the Vice-
President of the company by the President for his personal use whose group has
gained majority due to the death of one of the directors of the company. The
President and shareholders were could not do anything to improve the
management of the company and put it on track. The company's financial position
further deteriorated due to non-collection of bills of huge amount due from the
government for supply of electricity. In view of these facts and circumstances, the
Court (now the Tribunal) deemed it just and equitable to order winding up of the
company under section 433 (3) of the companies Act, 1956 (now section 273 (1) (d) of
the companies Act, 2013.

Fourthly, when the principal or majority shareholders have adopted an aggressive or

oppressive or squeezing policy towards the minority shareholders. In Duley & corrington
Investment (P) Ltd V. [Link], 26 a person named Prathapan who was a NRL,
through his mother, induced Ramanujam to start a company with the initial
investment of five lakh rupees. Prathapan, who was the main shareholders of the
company, later came to know that Ramanujam convened a meeting of the Board of
dierectors of the company on October 24, 1994 and got a resolution passed that he
may be allotted equity shares. Prathapan was not informed about this resolution. In
result, he lost his majority share-holding and became a minority share holder vis-à-
vis Ramanujam. Aggrieved by this, Prathapan filed a petition for winding up of the
company under section 433 (f) (now section 272 of the 2013 Act) alleging that at the
time of starting the company, Ramanujam had not invested any money and he was
drawing huge salary as a managing director of the company without contributing to
the promotion of company's business. Ramanujam contested the winding up
25
AIR 1956 SC 213
26
AIR 25 SC 1624
petition on the ground that Prathapan being an NRI, the petition filed by him was not
maintainable. The CLB (Tribunal), however, did not accept this plea of Ramanujam as
Prathapan's name was registered as a share-holder in the share-holder's register.
Allowing the petition, the CLB (Tribunal) held that it was a fit case of ordering
winding up of company on just and equitable ground. In Sangram Singh P.
Gaikward V. Shanti Devi Gaikward., 27 the Apex court (now Tribunal) held that an act
which is burdensome, troublesome and wrongful may be considered as an oppressive act.
In the context of a company an act of the majority which is detrimental to the interests
of the minority shareholders will be an oppressive act against which winding orders may
be issued by the Tribunal.

Where a director of the private company was removed only on the ground that he
refused to consent to a transaction, the court held that to be an abuse of power which
made it just equitable to wind up the company. Ultra Vires application of the funds
and the consequent dissociation of 93 percent shareholders with the company and the
persistent refusal by a managing director to hold meetings or to pay dividends have
been held to be sufficient to found a winding up order.

Fifthly, Where the company has been conceived or brought into existence
fraudulently for some illegal purposes, it is just and equitable to order its
winding_up. In Universal Mutual Aid & Poor Houses Association V. A.D Thippa
Naidu. 28 the main object of the company was conduct of a lottery, therefore, the
mere fact that some of its objects were Philanthropic was not a sufficient ground to
prevent the company being wound up as it was mainly formed for an illegal
purpose. In Re T.E Brinsmead & Sons., 29 the prospectus of the company stated that
it had agreed to purchase the business of an existing firm and thus the subscribers for
the company's share were intentionally misled to believe that the firm was really a
reputed concern. The company was ordered to be wound up since it was formed for a
fraudulent purpose. It has, therefore, been held by the Calcutta high Court In
Oriental Navigation Co. V. Bhanaram Agarwal., 30 that fraudulent misrepresentation
in the prospectus will not be a sufficient ground for winding up order in India

27
AIR 25 SC 89
28
AIR 1933 Mad. 16.
29
(1897) I Ch 406 (CA).
30
AIR 1922 Cal. 365.
as the majority of shareholders can waive the fraud.

Where the evidence showed that the company had inadequate records; it was a
share vending company but pretending to be playing an advisory role for investment
purposes and was advising investors to purchase such shares of American companies as
were not freely tradable, this was held to be an unlawful operation and against public
interest.

Lastly, where it is proved that an incorporated private company is in substance a

partnership, it may be ordered to be wound up when there is abuse of power or
breach of good faith which the partner's owe each other. In Bhaskar Stoneware
Pipes (P) Ltd. V. R.N. Bhaskar., 31 The Delhi High Court 32 pointed out that the crux of
the matter is not whether a member has been expelled or not, but whether there has
been a breach of mutual faith and understanding between the parties that parity of
shareholders will be maintained but one group attempted to take-over the company by
increasing its share-holding. Therefore, the court ordered the winding up of the
company under just and equitable clause.

The relief under 'just and equitable' clause i.e., section 271 (f) of the companies Act,
2013 is in the nature of a last resort when other remedies are not efficaciously
available to protect the general interests of the creditors and the shareholders.
Therefore, the Tribunal will refuse to make an order of winding up if in its opinion
some other remedy is available to the petitioners and they are unreasonably insisting
on winding up instead of pursuing the other remedy. For example, in case of
oppression, misconduct or mis-management, an alternative remedy under section 241
being available, a petition under section 271 (f) for winding up shall not be
normally entertained.

Winding up order under 'just and equitable' clause may not be made in the
following cases:-

(a) Where the company was at a loss but there were chances of its making profits
and majority of shareholders are against winding up;

(b) Where the directors in exercise of their powers to do so, refused to register the

31
(1988) 63 comp. Cas. 184 (Del).
32
Now the petition for winding up has to be filed with the Tribunal and not the High Court.
 executors of the deceased shareholders even when this caused hardship to
shareholders;

(c) Where business of the company was temporarily suspended owing to trade
depression and was intended to be resumed when conditions improved;

(d) If just and equitable ground did not exit at the time of hearing the petition
though it might have existed at the time of presenting the petition.

Compulsory order when there is a voluntary winding up:

Besides, the grounds mentioned above, The Tribunal may also make a winding
up order in respect of the company which is being wound up voluntarily on a
petition presented by any person authorized to do so under section 272 of the
companies Act, 2013 or the official liquidator. The Tribunal may make a winding
up order on such petition only when it is satisfied that the voluntary winding up
cannot be continued in the interests of the creditors or contributories due to
liquidator's incompetence or failure to fulfill his statutory duties, coupled with
unwillingness of the majority of contributors to replace him.

Who may file the petition for winding up [section 272 (2)1:

Section 272 (1) of the companies Act, 2013 (section 439 of Act, 1956) provides that a
petition for the winding up of the company may be presented to the Tribunal by any
of the following:

(a) The company;

(b) Any creditor or creditors including any contingent or prospective creditor or

creditors; or

(c) Any contributory or contributories; or

(d) All or any of the above parties, whether together or separately; or

(e) The Registrar of companies; or

(f) In a case filing under section 224 i.e., application for winding up following an
investigation, by any person authorized by the central government in that
behalf; or

(g) Where a company is already under voluntary liquidation or under winding

up by the Tribunal, and such voluntary winding up cannot be continued
 with due regard to the interests of the creditors or contributors or both, the
petition for an order of its winding up may be presented by any of the persons
mentioned above or by the official liquidator as provided in section 272 of the
companies Act,2013.

1. Petition by company [section 271 (1) (a)]: 33 The Company is entitled to petition
when it has passed a special resolution requesting that it be wound up by the
Tribunal. The company's petition has to be accompanied by the statement of affairs
in such form and manner as may be

1. Creditor's petition [section 272 (1) (b)]: A creditor, secured or otherwise,

debenture holder and a trustee for debenture holders can apply for winding up.
Where a petition is brought by a contingent or prospective creditor, the
Tribunal may admit it if there is a prima facie case and the security for costs is
given.

2. Contributory's petition [section 272 (1) (c)]: On the winding up of the company its
members are called contributories.34 Where the petition is filled because of the reduction
in membership, any contributory can apply. When the application is founded on any
other ground, it will be requisite that the shares in respect of which the petitioner is a
contributory were originally allotted to him or he has been the registered holder for at
least six months during the 18 months immediately before the commencement of the
winding up or the shares have devolved on him through the death of a former holder. A
contributory is entitled to present a petition even if he is the holder of fully paid shares
or that the company may have no assets at all or may have no surplus assets left after
satisfaction of its liabilities. The Supreme Court in Seven Trent Water Purification Inc.
V. Chloro Controls (India) Pvt. Ltd & Another.,35 held that the person filing the petition
for winding up of the company under section 439 (4) (b) (section 272 (1) (d) of 2013 Act)
must be registered as a shareholder of the company. In other words, any former
shareholder of the company whose name is scored of from the Registrar of shareholders
cannot bring a petition against the company for its winding up as he is not a contributory.
The Court further made it clear that section 439 (4) (B) [now Section 272 (1) (d)] would
apply only to natural persons who are holding shares in their individual capacity and not to
33
Supra, Note 5, p. 723-724
34
The term "contributory — has been defined in section 2 (26) of the companies Act, 2013. It includes the
holders of any shares which are fully paid-up and who, at the commencement of the winding up of a company.
are
35
shareholders of the Company.
AIR 2009 SC 1290.
juristic entities. This become evident from the word 'death' mentioned in the statute which
refers only to natural persons.