Companies Act Section 270

Companies Act, Section 270: Winding Up by Tribunal

Section 270 of the Companies Act, 2013 lays down the foundation for the process of winding up of a company by the Tribunal. This section acts as the gateway provision that introduces the applicability of Part I of Chapter XX of the Act, which contains detailed procedures, grounds, and consequences related to the compulsory winding up of companies through the judicial route.

Where a company is to be wound up under the jurisdiction of the National Company Law Tribunal (NCLT), the provisions set out in Part I of Chapter XX of the Companies Act, 2013 shall be fully applicable and govern such proceedings. This includes all relevant procedural rules, powers of the Tribunal, appointment of liquidators, rights and obligations of stakeholders, and the distribution of assets during the winding-up process.

1. Meaning of Winding Up by Tribunal

"Winding up" refers to the process by which a company is legally dissolved. When the winding up is carried out by the Tribunal, it is also referred to as compulsory winding up. In such cases, the Tribunal, upon receiving a valid petition and being satisfied with the grounds for winding up, passes an order for the company to be closed and its affairs to be settled under judicial supervision.

2. Role of Section 270

Section 270 serves as the introductory clause to the statutory framework for compulsory winding up. It establishes that:

The winding-up process initiated and carried out by the Tribunal shall be strictly in accordance with the provisions set out in Part I of Chapter XX.
This includes all procedural requirements, including who may file for winding up, the appointment and duties of a Company Liquidator, and the role of the Tribunal in overseeing and administering the winding-up.
Key Provisions Covered Under Part I (Made Applicable by Section 270)

Once Section 270 brings Part I into operation, the following provisions and rules become relevant:

Section 271: Grounds on which a company may be wound up by the Tribunal (such as inability to pay debts, acting against national interest, fraudulent conduct, etc.).
Section 272: Who may file a petition for winding up (creditors, company, contributories, Registrar, etc.).
Section 273 to 275: Powers of the Tribunal upon receipt of a winding-up petition.
Section 276 to 283: Appointment, powers, duties, and oversight of the Company Liquidator.
Section 284 to 289: Consequences of winding-up order and procedural matters like settlement of list of contributories, final dissolution, etc.
Other rules and procedures prescribed by the Insolvency and Bankruptcy Code (IBC), 2016, to the extent applicable.
Purpose and Importance of Section 270

Legal Clarity: It establishes that any winding-up proceeding initiated under the supervision of the Tribunal will be conducted as per the framework outlined in Part I, ensuring uniformity.
Judicial Oversight: It empowers the Tribunal to exercise full authority over the winding-up process, from admission of petitions to final dissolution.
Safeguards for Stakeholders: Ensures fair treatment and legal remedy for creditors, employees, shareholders, and other stakeholders involved in the winding-up process.
Integration with IBC: With the advent of the Insolvency and Bankruptcy Code, 2016, some provisions of winding up now operate in coordination with the IBC framework. However, where applicable, Section 270 still applies to winding-up cases that fall outside the scope of the IBC.