What are the powers of the court to order winding-up subject to its super

Voluntary Winding-up Under Supervision of the Court

At any time after a company has passed a resolution for voluntary winding-up, the court may make an order that the voluntary winding-up should continue subject to the supervision of the Court [Section 522]. Application for such supervision may be made by a creditor, or a contributory, or the company, or the liquidator.

“One advantage of having a supervision order is that the liquidator is allowed to occupy the same position and exercise the same power (subject to restrictions, where necessary) as a voluntary liquidator. At the same time the advantage of a compulsory winding-up as regards stay of suits and other proceedings and making and enforcing calls, etc., are also secured and the Court is empowered to exercise all the powers which it can exercise in a compulsory winding-up... In truth, a supervision order is an amalgam of both_a volu...”ltary winding-up and a winding-up by Court as it is made on such terms and conditions as the Court thinks just” [Avadh Behari J., in N. Rajaraman Vs. Hindustan Brown Boveri Ltd.].

Such an order is passed by the court where

1. the resolution for winding-up was obtained by fraud, or

2. the rules relating to winding-up order are not being observed, or 3. the liquidator is prejudicial or is negligent in collecting the assets.

The Court, in such a case, gets the same powers as it has in the case of compulsory winding-up under order of the Court. The Court may also appoint an additional liquidator or liquidators. It may also remove any liquidator and fill any vacancy occasioned by the removal or by death or by resignation [Section 524]. A liquidator so appointed shall have the same powers, be subject to the same obligations and in all respects stand in the same position as if he had been appointed in accordance with the provisions of the Act relating to the appointment of liquidator in voluntary windingup, subject, however, to any restrictions the Court may impose [Section 525].

1. Effect of Superoision Order [Section 5261. Unless the Court imposes restrictions on the exercise of any powers by the liquidator, he will have all the powers conferred on a liquidator in voluntary winding-up [Section 526(1)]. The Court will also have as wide powers as in compulsory winding-up. The Court may stay suits or legal proceedings.

It can make or enforce calls and all other orders necessary for beneficial winding-up of the company [Section 526(2)].

2. Powers of Court to Order Compulsory Winding-up [Section 527]. The court may pass an order for compulsory winding-up superseding the order of winding-up under its supervision. The Court may then appoint a person who is the liquidator, either provisionally or permanently to be liquidator in winding-up by the court in addition to and subject to the control of Official Liquidator.

22. Explain the duties of a liquidator of a company with regard to the following under the Companies Act, 1956:

(i) the money in his hand representing the dividend payable to any creditor, which remained unpaid for a period of six months after the date on which the dividend was declared; and