Official Liquidators

359. Appointment of Official Liquidator

359(1).

• For winding up companies through the Tribunal, the Central Government can appoint as many officers as needed to act as Official Liquidators.

• These officers can include:

  1. Official Liquidators.

  2. Joint Official Liquidators.

  3. Deputy Official Liquidators.

  4. Assistant Official Liquidators.

359(2).

• All liquidators appointed under this provision must be full-time (whole-time) officers of the Central Government.

359(3).

• The Central Government is responsible for paying the salary and other allowances of the:

  1. Official Liquidator, Joint Official Liquidator, Deputy Official Liquidator, and Assistant Official Liquidator.

360. Powers and functions of Official Liquidator

360(1).

• The Official Liquidator shall exercise such powers and perform such duties as may be prescribed by the Central Government.

360(2).

• (a).

  1. The Official Liquidator can use all or any powers that a Company Liquidator has under the Companies Act.

  2. The Official Liquidator has the same authority and functions for managing the winding-up process.

• (b).

  1. The Official Liquidator may carry out inquiries or investigations related to the winding-up.

  2. He can do this only when directed by the Tribunal or the Central Government.

361. Summary procedure for liquidation

361(1).

• A company may be wound up under the summary or the simplified procedure if two conditions are met:

  1. (i). The company’s assets have a book value of ₹1 crore or less.

  2. (ii). The company belongs to a prescribed class of companies.

• If these conditions are satisfied, the Central Government can order the company to be wound up using this faster, simplified process.

361(2).

• When such an order is made, the Central Government shall appoint the Official Liquidator as the liquidator of the company.

361(3).

• The Official Liquidator must immediately take custody or control of all assets, effects, and actionable claims belonging to, or appearing to belong to, the company.

• This secures the company’s property at the start of the process.

361(4).

• Within 30 days of appointment, the Official Liquidator must submit a report to the Central Government (in the prescribed form).

• The report must include whether, in the liquidator’s opinion, any fraud was committed in connection with the:

  1. Promotion.

  2. Formation.

  3. Management of the company’s affairs.

361(5).

• After receiving the report, the Central Government will review it to see if fraud was committed by the promoters, directors, or any other officers.

• If it finds evidence of fraud, the Central Government can order a further investigation into the company’s affairs.

• The investigating authority must submit its report within the time specified by the Central Government.

361(6).

• Once the Central Government reviews the investigation report, it decides how the winding up should proceed.

  1. It may order the company to continue winding up under Part I (The Regular Winding-Up process).

  2. Or it may allow the winding up to continue under the summary procedure provided in this Part.

362. Sale of assets and recovery of debts due to company

362(1).

• The Official Liquidator must sell or dispose of all assets of the company, whether movable or immovable.

• This must be completed within 60 days of his appointment.

362(2).

• Within 30 days of being appointed, the Official Liquidator must send notices to:

  1. The debtors of the company.

  2. The contributories (if applicable).

• These notices require them to pay the amounts they owe to the company.

• The payment must be made within 30 days of receiving the notice.

362(3).

• If a debtor does not pay the amount owed within the given time, the Official Liquidator can take further action.

• The Official Liquidator may apply to the Central Government for help in recovering the money.

• The Central Government may then issue appropriate orders to recover the outstanding amount.

362(4).

• Any money the Official Liquidator recovers under this process must be deposited according to Section 349.

• This means the recovered amount must be paid into the public account of India.

• For the Official Liquidator, this deposit is made in the Reserve Bank of India (RBI).

363. Settlement of claims of creditors by Official Liquidator

363(1).

• Within 30 days of being appointed, the Official Liquidator must send a notice to all creditors, asking them to submit (“prove”) their claims.

• Each creditor then has 30 days from receiving the notice to file their claim in the prescribed manner.

• The idea is to create a clear, organised, and time-bound process for identifying all creditors of the company.

363(2).

• The Official Liquidator must prepare a list of all creditors’ claims in accordance with the prescribed rules.

• Each creditor must be informed whether their claim has been accepted or rejected.

• If a claim is rejected, the reasons must be clearly recorded in writing.

364. Appeal by creditor

364(1).

• If a creditor disagrees with the Official Liquidator’s decision about accepting or rejecting his claim under Section 363, he has a remedy.

• The creditor can file an appeal before the Central Government.

• This appeal must be filed within 30 days from the date the decision was communicated.

364(2).

• After receiving the creditor’s appeal, the Central Government can ask the Official Liquidator for a report.

• Based on this, the Central Government may either:

  1. Dismiss the appeal.

  2. Modify the Official Liquidator’s decision.

• This process is to ensure there is a proper review and correction mechanism.

364(3).

• The Official Liquidator must pay all creditors whose claims have been accepted.

• So that all valid claimants receive their money on time during the winding-up process.

364(4).

• While claims are being settled, the Central Government can step in at any time if needed.

• It may refer the matter to the Tribunal for further directions or orders.

• All complex or disputed issues can be properly adjudicated by the Tribunal.

365. Order of dissolution of company

365(1).

• After the company is completely wound up, the Official Liquidator must prepare and submit a final report.

  1. (i). If no reference was made to the Tribunal under Section 364(4), the report is sent only to the Central Government.

  2. (ii). If a reference was made under Section 364(4), the report must be sent to both the Central Government and the Tribunal.

365(2).

• After receiving the final report, the Central Government (or the Tribunal, as the case may be) shall order that the company be dissolved.

• This formally terminates the legal existence of the company.

365(3).

• Once the order of dissolution is passed, the Registrar of Companies will:

• Remove the name of the company from the register of companies.

• They will also publish a notification to that effect.

• This publicly confirms that the company no longer exists.