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CORPORATE LAW ASSIGNMENT

ON

DUTIES OF LIQUIDATOR

ON WINDING UP
Introduction
Main Functions of Official Liquidator:
Realization
Settlement
Distribution
Dissolution
Public Interest Reports




A. OFFIIAL LI!"IDA#OR
In exercise of the powers conferred by Section 552 and clause
(b) of the proviso to section 647 read with subsection (!) of
section 642 of the "o#panies $ct !%56 the "entral &overn#ent
has fra#ed the "o#panies ('fficial (i)uidator*s $ccounts) +ules
!%65,-he 'fficial (i)uidators are officers appointed by the
"entral &overn#ent under Section 44. of the "o#panies act
and are attached to the various /i0h "ourt, -he 'fficial
(i)uidators are under the ad#inistrative char0e of the respective
+e0ional 1irectors who supervise their functionin0, In the
conduct of the windin0 up of the co#panies however 'fficial
(i)uidators act under the directions of the /i0h "ourts, -he
2ri#ary function of the 'fficial li)uidator is to ad#inister the
assets of co#panies under li)uidation sale of the assets and
reali3ation of all debts of co#panies in li)uidation for the purpose
of distributin0 the sa#e a#on0 the various creditors and other
shareholders of the co#panies and to finally dissolve such
co#panies after the affairs are co#pletely concluded, 4hen a
co#pany is put to windin0 up by an order of the /i0h "ourt the
'fficial (i)uidator attached to the said /i0h "ourt ta5es
possession of the co#pany6s assets boo5s of accounts etc, and
li)uidates the co#pany as per the further orders of the /i0h
"ourt, -he procedure of li)uidation is prescribed under the
"o#panies ("ourt) +ules !%5%, -hese rules are approved by
the /onourable Supre#e "ourt of India and notified by the
"entral &overn#ent,

$. %&O A' $( APPOI'#(D AS OFFIIAL LI!"IDA#OR)
$ #e#ber fro# the panel of the professional fir#s of chartered
accountants advocates co#pany secretaries cost and wor5
accountants which the central 0overn#ent #ay constitute, 7ody
corporate approved by central 0overn#ent, 4hole8ti#e or part8
ti#e officer appointed by the central 0overn#ent,

. ROL( OF OFFIIAL LI!"IDA#OR
-he role of official li)uidator has been well discussed in various
provisions in the "o#panies $ct !%56 and the "o#panies
('fficial (i)uidator*s $ccounts) +ules !%65, Sections 44. to 469
of the "o#panies $ct !%56 deals with the overall role of official
li)uidators in windin0 up proceedin0s, (et6s have a snea5 view of
the provisions relatin0 to li)uidators:

S(#IO': MA##(RS D(ALI'* "'D(R #&( SAID S(#IO'S
44. $22'I;-<=;- '> '>>I"I$( (I?@I1$-'+
44% '>>I"I$( (I?@I1$-'+ -' 7= (I?@I1$-'+
45A $22'I;-<=;- $;1 2'4=+S '> 2+'BISI';$(
(I?@I1$-'+
45! &=;=+$( 2+'BISI';S $S -' (I?@I1$-'+S
452 S-C(= =-" '> (I?@I1$-'+
459 +="=IB=+ ;'- -' 7= $22'I;-=1 '> $SS=-S 4I-/
(I?@I1$-'+
454 S-$-=<=;- '> $>>$I+S -' 7= <$1= -' '>>I"I$(
(I?@I1$-'+
455 +=2'+- 7C '>>I"I$( (I?@I1$-'+
456 "@S-'1C '> "'<2$;C6S 2+'2=+-C
457 2'4=+S '> (I?@I1$-'+
45. 1IS"+=-I'; '> (I?@I1$-'+
45.$ =D"(@SI'; '> "=+-$I; -I<= I; "'<2@-I;&
2=+I'1S '> (I<I-$-I';
45% 2+'BISI'; >'+ (=&$( $SSIS-$;"= -'
(I?@I1$-'+
46A =D=+"IS= $;1 "';-+'( '> (I?@I1$-'+6S
2'4=+S
46! 7''ES -' 7= E=2- 7C (I?@I1$-'+
462 $@1I- '> (I?@I1$-'+6S $""'@;-S
469 "';-+'( '> "=;-+$( &'B=+;<=;- 'B=+
(I?@I1$-'+S,

$s per the "o#panies ('fficial (i)uidator*s $ccounts) +ules
!%65 the li)uidator has to co#ply with the followin0:
-he 'fficial (i)uidator shall #aintain in his office separate
account in respect of each co#pany under his char0e,
-he 'fficial (i)uidator shall also #aintain a "entral "ash
7oo5 to record all cash transactionsF such other boo5s as #ay be
necessary to wor5 out the periodical reconciliation of the
balances in the official li)uidators6 account,
=very 'fficial (i)uidator shall with the approval of the "entral
&overn#ent open a personal led0er account at the nearest
branch or a0ency of the +eserve 7an5 to be called the G'fficial
(i)uidator*s $ccountG which shall be a co#bined account in
respect of all the co#panies under his char0e,
2ay#ents #ade in cash and those #ade by che)ue shall be
re#itted to the +eserve 7an5 under separate challans,
-he ac5nowled0#ent of the +eserve 7an5 shall be obtained
for all #oneys re#itted into the +eserve 7an5 to the credit of the
said account,
-he 'fficial (i)uidator shall at the end of every three #onths
exa#ine the account of each co#pany in his char0e to ascertain
what #oneys are available for invest#ent and record in the
record boo5 of the co#pany the fact of his havin0 exa#ined the
accounts the decision ta5en by hi# re0ardin0 the invest#ent
and in case he decides not to invest any surplus fund the
reasons for such decisions,


D"#I(S OF #&( OFFIIAL LI!"IDA#OR
A. In+esti,ation
4here a windin08up order is #ade by the court the official
receiver has a statutory duty to investi0ateH
a) If the co#pany has failed the causes of the failureF and
b) &enerally the pro#otion for#ation business dealin0s and
affairs of the co#pany, -his applies to all cases includin0 those
where an insolvency practitioner is appointed li)uidator by the
court i##ediately on the #a5in0 of the windin08up order,
-he official receiver #ay #a5e a report to the court if heIshe
thin5s fit thou0h this is carried out rarely,
$. Official recei+er as liquidator
-he official receiver beco#es li)uidator i##ediately the windin08
up order is #ade and will re#ain so until so#eone else beco#es
li)uidator, /eIshe also beco#es li)uidator durin0 any subse)uent
vacancy, -he official receiver has a duty to protect the co#pany6s
assets and where appropriate to ta5e into custody or under
hisIher control all property etc, to which the co#pany is or
appears to be entitled to realise and distribute the sa#e to the
co#pany6s creditors and if there is a surplus to the persons
entitled to it,
. Realisation of assets at t-e initial sta,e
-here is no reason why the official receiver should not use hisIher
powers as li)uidator to co##ence the realisation of assets
where the assets involved are easy to realise and particularly
where an asset #ay be rendered valueless by the date of the first
#eetin0 such as bul5y ite#s of stoc5 which are expensive to
store or s#all value ban5 balances held in accounts that incur
char0es, =ven if the early realisation of an asset were to
preJudice the appoint#ent of an insolvency practitioner the
official receiver should act in the best interests of creditors and
see5 realisation,
D. Statement of affairs
-he official li)uidator #ust decide whether to re)uire a state#ent
of affairs, It is not usually the case that a state#ent of affairs will
be re)uired before the first interview with the director(s) and
0enerally the infor#ation supplied in for# 2I?" relatin0 to assets
and liabilities will be used rather than a separate state#ent of
affairs bein0 re)uired,
If the co#pany has been subJect to earlier insolvency
proceedin0s a state#ent of affairs #ay have been prepared in
relation to those proceedin0s,
+eference should also be #ade to the chapter pertainin0 toH
State#ents of affairs,

(. ase files
-he official li)uidator is re)uired to #aintain a case file in respect
of each windin0 up, -he file is divided into ten parts and papers
are filed within those parts as follows:
2reli#inary exa#ination papers
>urther investi0ation
"ourt papers
Statutory notices
"orrespondence
<eetin0s reports to creditors notices and proofs
$ssets
"losin0II2 handover
<iscellaneous
F. onfidentialit.
-he official li)uidator #ust not disclose infor#ation about a case
to any person who does not have a le0iti#ate reason to have the
details of the case,
*. Insol+enc. Practitioner appointed liquidator immediatel.
4here a windin0 8 up order is #ade i##ediately upon the
appoint#ent of an ad#inistrator ceasin0 to have effect or where
there is a supervisor of a voluntary arran0e#ent in office the
court #ay appoint the for#er ad#inistrator or supervisor as
li)uidator of the co#pany,
In such circu#stances the official li)uidator re#ains under a
statutory duty to investi0ate to 0ive notice of advertise and
0a3ette the order and to provide infor#ation to creditors and
contributories, $ny inspection of the co#pany6s boo5s and papers
will need to be #ade with the arran0e#ent of the li)uidator H
possibly by inspectin0 the records at their offices, -he li)uidator
has a duty to co8operate with the official receiver6s investi0ations
includin0 #a5in0 co#pany records available,
-he official li)uidator does not have to su##on #eetin0s of
creditors and contributories or issue notice of no #eetin0, 4here
a li)uidator is appointed by the court in the circu#stances
#entioned it is the li)uidator6s duty to send for#s of proof of
debt, $ proof of debt #ust be sent to any creditor of the co#pany
on re)uest,
-he official li)uidator #ay encounter the involve#ent of
insolvency practitioners in respect of other insolvency
proceedin0s involvin0 the co#pany, $n insolvency practitioner in
office will probably be a useful source of infor#ation re0ardin0
the co#pany6s affairs H particularly at initial en)uiry sta0e,