Meanwhile, her manager is shuffling papers around of his

Meanwhile, her manager is shuffling papers around of his

desk while saying, ‘Go ahead. I’ll be listening while I get these forms finished up.” What

kind of an impression will the employee receive? The employee obviously thinks that her

problem is important, but the manager acts as if ‘his forms are as important, if not more

so. As a result, he has established a negative listening climate with no demonstrated

empathy. The manager should give full physical and psychological attention to the

speaker by maintaining eye contact, leaning slightly toward the speaker, changing facial

expression in relationship to the message, and taking notes. All are ways that

demonstrate a positive listening climate.Industrial psychologist Argyrist in writing about

personality, sees seven basic needs in man.. Two of these

needs, especially relevant to industrial communication are:

A research study asked employees to indicate which of these poor listening habits they

A research study asked employees to indicate which of these poor listening habits they

found to be the most common. In the results, two items seemed to stand out.

When I’m talking, he finishes sentences for me.

When I come in, he doesn’t put down what he is

doing and turn his attention completely to me.

This finding is especially revealing. Clearly, the listener needs to give undivided attention

to the speaker who does not want to be rushed to complete the message. This fact

relates to the “25-to 75” speaking-thinking differential discussed earlier. The listener’s

mind moves so much more rapidly than the spoken word that the listeners impatience

may show as she attempts to complete the speaker’s sentence. Even though the listener

is paying attention, this impatience to complete the speaker’s communication may

develop a negative listening climate. The same is true when the listener works on

something else while attempting to listen. The speaker may soon get the feeling that the

message being delivered is not very important.

It is particularly important to demonstrate a positive climate when involved in empathetic

listening. As discussed earlier in this chapter, an empathetic listener tries to understand

the speaker’s inner feelings. Most people have a very difficult time expressing their, so

an encouraging, supportive, receptive environment needs to be established. Feelings of

elation, sadness. or fear are more easily and willingly expressed when received in a

congruent manner by a receiver whose behaviour demonstrates “I’m with you,”

Unfortunately, incongrnment listener behaviour is too

often the norm. For instance, an employee enters a manager’s office and says she has a

major problem to discuss

Write short notes on:Winding-up of unregistered companies.. (b) Dissolution of a defunct company

(a) Meaning of Unregistered Company (Section 582)

Section 582 of the Companies Act defines an unregistered company. The definition is given in two parts, viz., (i) What the expression ‘unregistered company’ includes; and (ii) What it does not. Clause (b) of Section 582 provides that ‘unregistered company’ shall include any partnership, association or company consisting of more than seven members at the time when the petition for its winding-up is presented before the Court. The expression, however, does not include (i) a railway company incorporated by any Act of Parliament or other Indian law or any Act of Parliament of U .K.; (ii) a company registered under the Companies Act, 1956; or (iii) a company registered under any previous companies law and not being a company the registered office whereof was in Burma, Aden or Pakistan immediately before the separation of that country from India:

An illegal association is not an unregistered company and, therefore, cannot be wound-up under section 583 [Reghubar Dayal Vs. The Sarafa Chamber AIR [1954] All 555].

The definition of ‘unregistered company’ as given under Section 582 should, thus, be read along with Section 11 of the Act. Accordingly, an unregistered company consists of a partnership, association or company having more than seven members but not more than ten members (in case of banking business) and twenty members (in case of other business). If membership exceeds ten or twenty as the case may be, it will be an illegal association and the provisions of Part X of the Act will not apply.

Also, an association or company having less than seven members cannot be wound-up by the Court as an unregistered company.

Winding-up of an Unregistered Company (Section 583)

The rules relating to winding-up of unregistered companies are:

1. No unregistered company shall be wound-up voluntarily or subject to the supervision of the Court [Section 583(3)]. Thus, an unregistered company can only be compulsorily wound-up by the Court.

2. The circumstances under which an unregistered company may be wound-up

are as follows:

(a) If the company is dissolved or has ceased to carry on business or is

carrying on business only for the purposes of winding-up its affairs.

(b) If the company is unable to pay its debts.

(c) If the Court is of the opinion that it is jusrand equitable that the company

should b’e wound-up [Section 583(4)].

As per Section 583(5) an unregistered company shall be deemed unable to pay its

debts in the following circumstances:

(i) if a creditor, to whom the company is indebted in a sum exceeding Rs. 500, has served on the company a demand under his hand requiring the company pay the sum so due, and the company has, for three weeks neglected to pay the sum or to secure or compound for to the satisfaction of the creditor.

(ii) If any suit or other legal proceedings have been instituted against any member for any debt or demand que, or claimed to be due, from the company or from him in his character of member, and notice in writing of the institution of the suit or proceedings having been served on the company and the company has not, within ten days thereafter:

(a) paid, secured or compounded the debt or demand; or (b) procured the suit or legal proceedings to be stayed; or

(c) indemnified the defendant to his satisfaction against the suit of other legal

proceeding and against all costs, damages and expenses to be incurred by him by reason of the same.

(iii) If execution or other process issued on a decree or order of any Court in favour of a creditor against the company or any member thereof is returned unsatisfied in whole or in part.

(iv) If it is otherwise proved to the satisfaction of the Court that the company is

unable to pay its debts. .

As to which Court shall have the jurisdiction in the matter of winding-up of an

unregistered company, sub-section (2) of Section 583 provides as follows:

For the purpose of determining the Court having jurisdiction in the matter of the winding-up, an unregistered company shall be deemed to be registered in the State where its principal place of business is situate or, if it has a principal place of business situated in more than one State, then, in each State where it has a principal place of business. The principal place of business of that State, where the winding-up proceedings have been instituted, shall be deemed to be the registered office of the company for the purposes of winding-up.

Duties of Liquidator

The duties of liquidator with respect to the unpaid money and refundable assets which remains undistributed after six months from the date on which they become payable are enumerated in Section 555 of the Companies Act, 1956. These are:

1. The liquidator shall forthwith pay the said money into the public account of India in the Reserve Bank of India in a separate account known as the Companies Liquidation Account.

2. The liquidator shall, on the dissolution of the company, similarly pay into the said account any money representing unpaid dividends or undistributed assets in his hands at the date of dissolution.

3. The liquidator shall, when making any payment in both the cases furnish to such officer as the Central Government may appoint in this behalf, a statement in the prescribed form, setting forth, in respect of all sums included in such payment, the nature of the sums, the names and last known addresses of the persons entitled to participate therein, and such other particulars as may be prescribed.

4. The liquidator shall be entitled to a receipt from the Reserve Bank of India for any money paid to it in both the cases; and receipt shall be an effectual discharge of the liquidator in respect thereof.

5. Where the company is being wound-up by the Court, the liquidator shall make payments referred to in both the cases by transfer from the account referred to in Section 552 (i.e., the public accounts of India in the RBI).

6. Where the company is being wound-up voluntarily or subject to the supervision of the Court, the liquidator shall, when filing the statement in pursuance of sub-section (1) of Section 551, indicate the sum of money which is payable to the Reserve Bank of India in both the cases which he has in his hands or under his control during the six months preceding the date to which the said

statement is brought down, and shall, within 14 days of the date of filing of the said statement, pay that sum into the Companies Liquidation Account.

7. Any money paid into the Companies Liquidation Account in pursuance of this Section, which remains unclaimed thereafter for a period of 15 years, shall be transferred to the General Revenue Account of the Central Government; but a claim to any money so transferred may be preferred under sub-section (7) and shall be dealt with as if such transfer had not been made; the order, if any, for payment on the claim being treated as an order for refund or revenue.

8. Any liquidator retaining any money which should have been paid by him into

the Companies Liquidation Account under this section shall:

(a) pay interest on the amount retained at the rate of 12% per annum and also pay such penalty as may be determined by the Registrar. However, the Centrl Government may in proper case remit either in part or in whole the amount of interest which the liquidator is required to pay under this

clause;

(b) be liable to pay any expenses occasioned by reason of his default; and (c) where the winding-up is by or under the supervision of the Court,

also be liable to have all or such part of his remuneration as the Court may think just to be disallowed, and to be removed from his office by the court.

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

The shareholders competent to make n application to CLB are

(i) in case of a company having share capital, not less than 200 members or members holding not less than 1j10th of the total voting power therein;

(ii) in case of a company having no share capital, not less than 1j5th of the persons

on the company’s register of members.

The application by members should be supported by necessary evidence to show

that the applicants have good reasons for requiring the investigation (Sec. 236).

The CLB, after hearing the parties, may declare that the affairs of the company ought to be investigated and on such declaration, the Central Government shall appoint one or more Inspectors to investigate the affairs of the company in such manner as directed by the Central Government.

BUY-BACK OF SHARES

“A company’ cannot buy-back its own shares”, eXI)lain. Are there any exceptions to it?

Section 77 of the Companies Act does lIot permit a company to purchase its own shares, for it involves permanent reduction in share capital which is a

cushion to the creditors. The Companies Act also does not allow

reduction of share capital except for certain legitimate purposes by adapting’

the procedure given in Sections 100 to t03. .

There has been persistent demand from the corporate sector, in its endeavour to meet the international practices, to allow companies to buyback their

own securities (shares or debentures). Responding to this demand,

.the Government amended the Companies Act and allowed the corporate sector to buy-back its own shares vide Companies (Amendment) Act 1999. By

this Act a new Section 77 A was inserted containing the provisions permitting the companies to buy-back their own securities subject to certain conditions.

The major reasons for buy-back may be one or more of the following: (a) To increase underlying share value, as EPS (earning per sharc)

increases after buy-back. In turn. it will push up the market value of the remaining shares.

(b) For adjusting the capital base, if the company is over-capitalised

andor to achieve optimum debt-equity ratio.

© To p,’event hostile takeover as it will reduce the floating stock from

the market and s: JTe prices will also be increased in the market.