Section 290 of Companies Act, 2013 – Powers and duties of Company Liquidator

SECTION 290. POWERS AND DUTIES OF COMPANY LIQUIDATOR

[Effective from 15th December, 2016]

(1) Subject to directions by the Tribunal, if any, in this regard, the Company Liquidator, in a winding up of a company by the Tribunal, shall have the power—

(a)   to carry on the business of the company so far as may be necessary for the beneficial winding up of the company;

(b)   to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose, to use, when necessary, the company’s seal;

(c)   to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels;

(d)   to sell the whole of the undertaking of the company as a going concern;

(e)   to raise any money required on the security of the assets of the company;

(f)   to institute or defend any suit, prosecution or other legal proceeding, civil or criminal, in the name and on behalf of the company;

(g)   to invite and settle claim of creditors, employees or any other claimant and distribute sale proceeds in accordance with priorities established under this Act;

(h)   to inspect the records and returns of the company on the files of the Registrar or any other authority;

(i)   to prove rank and claim in the insolvency of any contributory for any balance against his estate, and to receive dividends in the insolvency, in respect of that balance, as a separate debt due from the insolvent, and rateably with the other separate creditors;

(j)   to draw, accept, make and endorse any negotiable instruments including cheque, bill of exchange, hundi or promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the company as if such instruments had been drawn, accepted, made or endorsed by or on behalf of the company in the course of its business;

(k)   to take out, in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases, the money due shall, for the purpose of enabling the Company Liquidator to take out the letters of administration or recover the money, be deemed to be due to the Company Liquidator himself;

(l)   to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities and for protection of the assets of the company, appoint an agent to do any business which the Company Liquidator is unable to do himself;

(m)   to take all such actions, steps, or to sign, execute and verify any paper, deed, document, application, petition, affidavit, bond or instrument as may be necessary,—

(i)   for winding up of the company;

(ii)   for distribution of assets;

(iii)   in discharge of his duties and obligations and functions as Company Liquidator; and

(n)   to apply to the Tribunal for such orders or directions as may be necessary for the winding up of the company.

(2) The exercise of powers by the Company Liquidator under sub-section (1) shall be subject to the overall control of the Tribunal.

(3) Notwithstanding the provisions of sub-section (1), the Company Liquidator shall perform such other duties as the Tribunal may specify in this behalf.

Applicable Rules

Companies (Winding Up) Rules, 2020

[Effective from 1st April, 2020]

Rule 77. Employment of additional or special staff by Official Liquidator.—Where the Official Liquidator is of the opinion that the employment of any special or additional staff is necessary in any liquidation, he shall apply to the Tribunal for sanction, and the Tribunal may sanction such staff as it thinks fit on such salaries and allowances as the Tribunal may deem appropriate.

COLLECTION AND DISTRIBUTION OF ASSETS IN WINDING UP BY TRIBUNAL

Rule 128. Powers of Company Liquidator.—The duties imposed by sub-section (1) of section 290 with regard to the collection of the assets of the company and the application of the assets in discharge of the company’s liabilities shall be discharged by the Company Liquidator subject to the control of the Tribunal.

Rule 129. Company Liquidator to be in position of receiver.—For the discharge by the Company Liquidator of the duties imposed by sub-section (1) of section 290, the Company Liquidator shall, for the purpose of acquiring and retaining possession of the property of the company, be in the same position as if he were a Receiver of the property appointed by the Tribunal, and the Tribunal may on his application enforce such acquisition or retention accordingly.

Rule 130. Company’s property to be surrendered to Company Liquidator on requisition.—Any contributory for the time being on the list of contributories, trustee, receiver, banker, agent, officer or other employee of a company which is being wound up under order of the Tribunal, shall on notice from the Company Liquidator and within such time as he shall by notice require, pay, deliver, convey, surrender or transfer to or into the hands of the Company Liquidator any money, property or books and papers in his custody or under his control to which the company is or appears to be entitled and where the person so required fails to comply with the notice, the Company Liquidator may apply to the Tribunal for appropriate orders and the notice shall be in Form WIN 51.