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PAT-XI
WINDING UP
PRELIMINARY
297. Modes
of winding up:-
(1) The winding up
of a company may be either:-
(i) by
the Court; or
(ii) voluntary;
or
(iii) subject to the
supervision of the Court.
(2) Save as otherwise
expressly provided, the provisions of this Ordinance with respect
to winding up shall apply to the winding up of a company in any of
the modes specified in sub-section (1).
CONTRIBUTORIES
298. Liability
as contributories of present and past members:-
(1) In the event of
a company being would up, every present and past member shall, subject
to the provision of section 299, be liable to contribute to the assets
of the company to an amount sufficient for payment of its debts and
liabilities and the costs, charges and expenses of the winding up,
and for the adjustment of the rights of the contributories among themselves,
with the qualifications following, that is to say:-
(i) a past member
shall not be liable to contribute if he has ceased to be a member
for one year or upwards before the commencement of the winding up;
(ii) a past member
shall not be liable to contribute in respect of any debt or liability
of the company contracted after he ceased to be a member;
(iii) a past member
shall not be liable to contribute unless it appears to the Court that
the present members are unable to satisfy the contributions required
to be made by them in pursuance of this Ordinance;
(iv) in the case of
a company limited by shares, no contribution shall be required from
any past or present member exceeding the amount, if any, unpaid on
the shares in respect of which he is liable as such member;
(v) in the case of
a company limited by guarantee, no contribution shall, subject to
the provisions of sub-section (2), be required from any past or present
member exceeding the amount undertaken to be contributed by him to
the assets of the company in the event of its being wound up;
(vi) nothing in this
Ordinance shall invalidated any provision contained in any policy
of insurance or other contract whereby the liability of individual
members on the policy or contract is restricted, or whereby the funds
of the company are alone made liable in respect of the policy or contract;
and
(vii) a sum due to any past or present
member of a company in his character as such by way of dividends,
profits or otherwise, shall not be deemed to be a debt of the company
payable to that member in a case of compensation between himself and
any other creditor not being a member of the company, but any such
sum may be taken into account for the purpose of the final adjustment
of the rights of the contributories among themselves.
299. Liability
of directors whose liability is unlimited:-
In the winding up
of a limited company any director, whether past or present, whose
liability is, in pursuance of his Ordinance, unlimited, shall, in
addition to his liability, if any, to contribute as an ordinary member,
be liable to make a further contribution as if he were, at the commencement
of the winding up, a member of any unlimited company:
Provided that:-
(i) a past director
shall not be liable to make such further contribution if he has ceased
to hold office for a year or upwards before the commencement of the
winding up;
(ii) a past director
shall not be liable to make such further contribution in respect of
any debt or liability of the company contracted after he ceased to
hold office;
(iii) subject to the
articles, a director shall not be liable to make such further contribution
unless the Court deems it necessary to require that contribution in
order to satisfy the debts and liabilities of the company, and the
costs, charges and expenses of the winding up.
300. Definition
of "contributory":-
The term "contributory"
means every person liable to contribute to the assets of a company
in the event of its being wound up, and includes the holder of any
shares which are fully paid-up; and, in all proceedings for determining,
and all proceedings prior to the final determination, of, the persons
who are to be deemed contributories any person alleged to be a contributory.
301. Nature
of liability of contributory:-
(1) The liability
of contributory shall create a debt accruing due from him at the time
when his liability commenced, but payable at the time specified in
calls made on him for enforcing the liability.
(2) No claim founded
on the liability of a contributory shall be cognizable by the Court
of Small Causes.
302. Contributories
in case of death of member:-
(1) If a contributory
dies either before or after he has been placed on the list of contributories,
his legal representatives shall be liable, in a due course of administration,
to contribute to the assets of the company in discharge of his liability,
and shall be contributories accordingly.
(2) If the legal representatives
make default in paying and money ordered to be paid by them, proceedings
may be taken for administering the property of the deceased contributory,
and of compelling payment thereout of the money due.
303. Contributory
in case of insolvency of member:-
If a contributory
is adjudged insolvent either before or after he has been placed on
the list of contributories, then:-
(a) his assignees
in insolvency shall represent him for all the purposes of the winding
up, and shall be contributories accordingly, and may be called on
to admit to proof against the estate of the insolvent, or otherwise
to allow to be paid out of his assets in due course of law, any money
due from the insolvent in respect of his liability to contribute to
the assets of the company; and
(b) there may be proved against the
estate of the insolvent the estimated value of his liability to future
calls as well as calls already made.
304. Contributories
in case of winding up of a body corporate which is a member:-
If a body corporate
which is a contributory is ordered to be wound up, either before or
after it has been placed on the list of contributories:-
(a) the liquidator
of the body corporate shall represent if for all purposes of the winding
up of the company and shall be a contributory accordingly, and may
be called on to admit to proof against the assets of the body corporate,
or otherwise to allow to be paid out of its assets in due course of
law, any money due from the body corporate in respect of its liability
to contribute to the assets of the company; and
(b) there may be proved
against the assets of the body corporate the estimated value of its
liability to future calls as well as calls already made.
WINDING UP
BY COURT
CASES IN
WHICH COMPANIES MAY BE WOUND UP BY COURT
305. Circumstances
in which company may be wound up by Court:-
A company may be wound
up by the Court:-
(a) if the company
has, by special resolution, resolved that the company be wound up
by the Court.
(b) if default is
made in delivering the statutory report to the registrar or in holding
the statutory meeting or any two consecutive annual general meetings;
(c) if the company
does not commence its business within a year from its incorporation,
or suspends its business for a whole year;
(d) if the number
of members is reduced, in the case of private company, below two or,
in the case of any other company, below seven;
(e) if the company
is unable to pay its debts;
(f) if the company
is:-
(i) conceived or brought
forth for, or is or has been carrying on, unlawful or fraudulent activities;
(ii) carrying on business
not authorised by the memorandum;
(iii) conducting its
business in a manner oppressive to any of its members or persons concerned
with the formation or promotion of the company or the minority shareholders;
(iv) run and managed
by persons who fail to maintain proper and true accounts, or commit
fraud, misfeasance or malfeasance in relation to the company; or
(v) managed by persons
who refuse to act according to the requirements of the memorandum
or articles or the provisions of this Ordinance or fail to carry out
the directors or decisions of the Court or the registrar or the Authority
given in the exercise of powers under this Ordinance;
(g) if, being a listed
company, it ceases to be such company; or
(h) if the Court is
of opinion that it is just and equitable that the company should be
wound up.
Explanation.:-
The promotion or the
carrying on of any scheme or business, except the business carried
on under the provisions of the Insurance Act, 1938 (IV of 1938), howsoever
described, whereby, in return for a deposit or contribution, whether
periodically or otherwise, or a sum of money in cash or by means of
coupons, certificates, tickets or other documents, payment, at future
date or dates of money or grant of property, right or benefit, directly
or indirectly, and whether with or without any other right or benefit,
determined by chance or lottery or any other like manner, is assured
or promised shall be deemed to be an unlawful activity.
Explanation II.:-"Monitory
shareholders" means shareholders together holding not less than
twenty percent, of the equity share capital of the company.
306. Company
when deemed unable to pay its debts:-
(1) A company shall
be deemed to be unable to pay its debts:-
(a) if a creditor,
by assignment or otherwise, to whom the company is indebted in a sum
exceeding one per cent of its paid-up capital or fifty thousand rupees,
whichever is less, than due, has served on the company, by causing
the same to be delivered by registered post or otherwise, at its registered
office, a demand under his hand requiring the company to pay the sum
so due and the company has for thirty days thereafter neglected to
pay the sum, or to secure or compound for it to the reasonable satisfaction
of the creditor; or
(b) if execution or
other process issued on a decree or order of any Court or any other
competent authority in favour of a creditor of the company is returned
unsatisfied in whole or in part; or
(c) if it is proved
to the satisfaction of the court that the company is unable to pay
its debts, and, in determining whether a company is unable to pay
its debts, the Court shall take into account the contingent and prospective
liabilities of the company.
(2) The demand referred
to in clause (a) of sub-section (1) shall be deemed to have been duly
given under the hand of the creditor if it is signed by an agent or
legal adviser duly authorised on his behalf, or in the case of a firm
if it is signed by such agent or legal adviser or by any member of
the firm on behalf of the firm.
TRANSFER
OF PROCEEDINGS
307. Transfer
of proceedings to other Courts:-
Where the High Court
makes an order for winding up a company under his Ordinance, it may,
if it thinks fit, direct all subsequent proceedings to be had in a
Civil Court empowered by the Federal Government under sub-section
(1) of section 7 or, with the consent of any other High Court, in
such High Court or in a Civil Court subordinate thereto; and thereupon,
for the purposes of the winding up of the company, such High Court
of Civil Court, as the case may be, shall be deemed to be the "Court"
within the meaning of this Ordinance and shall have all the powers
and jurisdiction of the Court thereunder.
308. Withdrawal
and transfer of winding up from one Court to another:-
If, during the progress
of a winding up in a Civil Court, it is made to appear to the High
Court that the same could be more conveniently proceeded with in the
High Court or in any Civil Court empowered by the Federal Government
under sub-section (1) of section 7 the High Court may, as the case
may require:-
(a) withdraw the case
and proceed with the winding up itself; or
(b) transfer the case
to such Civil Court, and thereafter the winding up shall proceed in
such Civil Court.
PETITION
FOR WINDING UP
309. Provisions
as to application for winding up:-
An application to
the Court makes an order for winding up a company under this Ordinance,
if may, if it thinks fit, direct all subsequent proceedings to be
had in a Civil Court empowered by the Federal Government under sub-section
(1) of section 7 or, with the consent of any other High Court, in
such High Court or in a Civil Court subordinate thereto; and thereupon,
for the purposes of the winding up of the company, such High Court
or Civil Court, as the case may be, shall be deemed to be the "Court"
within the meaning of this Ordinance and shall have all the powers
and jurisdiction of the Court thereunder.
Provided that:-
(a) a contributory
shall not be entitled to present a petition for winding up a company
unless:-
(i) either the number
of members is reduced, in the case of a private company, below two,
or, in the case of any other company, below seven; or
(ii) the shares in
respect of which he is a contributory or some of them either were
originally allotted to him or have been held by him, and registered
in his name, for at least six months during the eighteen months before
the commencement of the winding up, or have devolve on him through
the death of a former holder;
(b) the registrar
shall not be entitled to present a petition for the winding up of
a company unless the previous sanction of the Authority has been obtained
to the presentation of the petition:
Provided that no such
sanction shall be given unless the company has first been afforded
an opportunity of making a representation and of being heard;
(c) the Authority
or a person authorised by the Authority in that behalf shall not be
entitled to present a petition for the winding up of a company unless
an investigation into the affairs of the company has revealed that
it was formed for any fraudulent or unlawful purpose or that it is
carrying on a business not authorised by its memorandum or that its
business is being conducted in a manner oppressive to any of its members
or persons concerned in the formation of the company or that its management
has been guilty of fraud, misfeasance or other misconduct towards
the company or towards any of its members; and such petition shall
not be presented or authorised to be presented by the Authority unless
the company has been afforded an opportunity of making a representation
and of being heard;
(d) the Court shall
not give a hearing to a petition for winding up a company by a contingent
or prospective creditor until such security for costs has been given
as the Court thinks reasonable and until a prima facie case for winding
up has been established to the satisfaction of the Court;
(e) the Court shall
not give a hearing to a petition for winding up a company by the company
until the company has furnished with its petition, in the prescribed
manner, the particulars of its assets and liabilities and business
operations and the suits or proceedings pending against it.
310. Right
to present winding up petition where company is being wound up voluntarily
or subject to Court's supervision:-
(1) Where a company
is being wound up voluntarily or subject to the supervision of the
Court, a petition for its winding up by the Court may be presented
by any person authorised to do so under section 309 and subject to
the provisions of that section.
(2) The Court shall
not make a winding up order on a petition presented to it under sub-section
(1) unless it is satisfied that the voluntary winding up or winding
up subject to the supervision of the Court cannot be continued with
due regard to the interests of the creditors or contributories or
both.
COMMENCEMENT
OF WINDING UP
311. Commencement
of winding up by Court:-
A winding up of a
company by the Court shall be deemed to commence at the time of the
presentation of the petition for the winding up.
POWERS OF
COURT HEARING APPLICATION
312. Hearing
of winding up petition by the Court:-
A petition for winding
up of a company shall come up for regular hearing, be proceeded with
and decided in the manner laid down in section 9.
313. Court
may grant injunction:-
The Court may, at
any time after presentation of the petition for winding up a company
under this Ordinance, and before making an order for its winding up,
upon the application of the company itself or of the any its creditors
or contributories, restrain further proceedings in any suit or proceeding
against the company, upon such terms as the Court thinks fit.
314. Power
of Court on hearing petition:-
(1) On hearing a winding
up portion the Court may dismiss it with or without costs, or adjourn
the hearing conditionally or unconditionally subject to the limitation
imposed in section 9 or make any interim order, or any order for winding
up the company or any other order that it deems just; but the court
shall not refuse to make a winding up order on the ground only that
the assets of the company have been mortgaged to an amount equal to
or in excess of those assets, or that the company has no assets.
(2) Where the petition
is presented on the ground that it is just and equitable that the
company should be wound up, the Court may refuse to make an order
of winding up, if it is of opinion that some other remedy is available
to the petitioners and that they are acting unreasonably is seeking
to have the company wound up instead of pursuing that other remedy.
(3) Where the petition
is presented on the ground of default in delivering the statutory
report or in holding the statutory meeting or any two consecutive
annual general meetings, the Court may, instead of making a winding
up order, direct that the statutory report shall be delivered or that
a meeting shall be held and order the costs to be paid by any persons
who, in the opinion of the Court, are responsible for the default.
(4) If, on hearing
a petition, the court is of opinion that, although the facts would
justify the making of a winding up order, the making of such order
would unfairly prejudice the members or the creditors, the Court may,
instead of making an order for winding up the company, make such order
as it thinks fit in the circumstances for regulating the conduct of
the affairs of the company and bringing to an end the matters complained
of, including an order for a change in the management of the company.
(5) Where the Court
makes an order for the winding up of a company, it shall forthwith
cause intimation thereof to be sent to the official liquidator appointed
by it and to the registrar.
315. Copy
of winding up order to be filed with registrar:-
(1) Within fifteen
days from the date of the making of the winding up order, the petitioner
in the winding up proceedings and the company shall file a certified
copy of the order with the registrar.
(2) If default is
made in complying with the foregoing provision, the petitioner or,
as the case may require, the company, and every officer of the company
who is in default, shall be punishable with fine which may extend
to one hundred rupees for each day during which the default continues.
(3) On the filing
of a certified copy of a winding up order, the registrar shall forthwith
make a minute thereof in his books relating to the company, and shall
simultaneously notify in the official Gazette that such an order has
been made.
(4) Such order shall
be deemed to be notice of discharge to the servants of the company,
except when the business of the company is continued
316. Suits
stayed on winding up order:-
(1) When a winding
up order has been made or a provisional manager has been appointed,
no suit or other legal proceeding shall be proceeded with or commenced
against the company except by leave of the Court, and subject to such
terms as the Court may impose.
(2) The Court which
is winding up the company shall, notwithstanding anything contained
in any other law for the time being in force, have jurisdiction to
entertain, or dispose, of, any suit or proceeding by or against the
company.
(3) Any suit or proceeding
by or against the company which is pending in any Court other than
that in which the winding up of the company is proceeding may, notwithstanding
anything contained in any other law for the time being in force, be
transferred to and disposed of by the Court.
317. Court
may require expeditious disposal of suits, etc:-
(1) Notwithstanding
anything contained in any other law:-
(a) if any suit or
proceedings, including an appeal, by or against the company which
is allowed to be proceeded with in any Court other than the Court
in which winding up of the company is proceeding, the Court may issue
directions to that other court if that Court is subordinate to it
and, in any other case, make a request to that other Court for expeditious
disposal of the pending suit or proceedings by or against the company;
and
(b) if any proceedings,
including proceedings for assessment or recovery of any tax, duty
or levies or appeal or review petition against any order is pending
or is likely to be instituted, before any officer, Tribunal, authority
or other body, the Court may issue direction to that officer, Tribunal,
authority or other body for expeditious action and disposal of the
said proceedings.
(2) Upon issue of
a direction or making of a request as aforesaid, the Court, officer,
Tribunal, authority or body to whom the same is addressed shall, notwithstanding
anything contained in any other law, proceed to dispose of the said
suit or other proceedings expeditiously by according it special priority
and adopting such measures as may be necessary in this behalf, and
shall inform the Court issuing the direction or making the request
of the action taken.
318. Effect
of winding up order:-
An order for winding
up a company shall operate in favour of all the creditors and of all
the contributories of the company as if made on the joint petition
of a creditor and of a contributory.
319. Power
of Court to state winding up, etc:-
(1) The Court may
at any time not later than three years after an order for winding
up, on the application of any creditor or contributory or of the registrar
or the Authority or a person authorised by it, and on proof to the
satisfaction of the Court that all proceedings to the winding up ought
to be stayed, withdrawn, cancelled or revoked, make an order accordingly,
on such terms and condition as the Court thinks fit.
(2) On the application
under sub-section (1), the Court may, before making an order, required
the official liquidator to furnish to the Court a report with respect
to any facts or matters which are in his opinion relevant to the application.
(3) A copy of every
order made under sub-section (1) shall forthwith be forwarded by the
Court to the registrar, who shall make a minute of the order in his
books relating to the company.
320. Court
to have regard to wishes of creditors or contributories:-
The Court shall, as
to all matters relating to a winding up, have regard to the wishes
of the creditors or contributories as proved to it by any evidence.
OFFICIAL
LIQUIDATORS
321. Appointment
of official liquidator:-
(1) For the purposes
of this Ordinance, so far as it relates to the winding up of companies
by the Court, the Court shall maintain, from amongst persons recommended
by the Authority, a panel of persons from whom it shall appoint a
provisional manager or official liquidator of a company ordered to
be wound up by the Court.
(2) In the order winding
up a company the Court shall appoint one or more of the persons on
the panel maintained as aforesaid to act as official liquidator of
the company and thereupon such person or persons shall, unless, within
three days of the communication of the order, he or they inform or
informs the Court of his or their inability to act as such, forthwith
start performing the duties and functions of official liquidator in
relation to that company and continue to perform such duties and functions
till the conclusion of winding up proceedings.
(3) If more persons
than one are appointed to the office liquidator, the Court shall declare
whether any act by this Ordinance required or authorise to be done
by the official liquidator is to be done by all or any one or more
of such persons.
(4) The Court may
determine whether any, and what, security is to be given by any official
liquidator on his appointment.
(5) Any vacancy in
the office of an any official liquidator shall be filled up by the
Court by the appointment of another person on the panel referred to
in sub-section (1).
(6) Notwithstanding
anything contained in sub-section (1) or sub-section (5), the Court
may, if it considers it necessary so to do for reasons to be recorded,
or on the application of creditors to whom amounts not less than sixty
per cent of the issued share capital of the company being wound up
are due, after notice to the registrar, appoint a person (other than
the official receiver) whose name does not appear on the panel maintained
for the purpose, to be the official liquidator.
322. Resignation,
removal, filling up vacancies, etc., of official liquidator:-
(1) An official liquidator
shall not resign or quit his office as official liquidator before
conclusion of the winding up proceedings except for reasons of personal
disability to the satisfaction of the Court.
Provided that an official
liquidator may at any time be removed by the Court for reasons to
be recorded.
(2) Any vacancy in
the office of an official liquidator shall be filled up by the Court
by the appointment of another person from the panel maintained section
321; and, until the person so appointed in his stead takes charge,
the outgoing official liquidator shall, unless the Court directs otherwise,
continue to act as the official liquidator.
323. Remuneration
of official liquidator:-
(1) An official liquidator,
not being a salaried officer of Government or of the Court, shall
be entitled to such remuneration by way of percentage of the amount
realised by him by disposal of assets or otherwise as may be fixed
by the Court having regard to the amount and nature of the work actually
done and subject to such limits as may be prescribed:
Provided that different
percentage rates may be fixed for different types of assets and items.
(2) In addition to
the remuneration payable under sub-section (1), the Court may permit
payment of a monthly allowance to the official liquidator for meeting
the expenses of the winding up for a period not exceeding twelve months
from the date of the winding up order.
(3) The remuneration
fixed as aforesaid shall to be enchanted subsequently but may be reduced
by the Court at any time.
(4) If the official
liquidator resigns, is removed from office or otherwise ceases to
hold office before conclusion of the winding up proceedings, he shall
not be entitled to any remuneration and the remuneration already received
by him, if any, shall be refunded by him to the company.
324. Style
of official liquidator:-
An official liquidator
shall be described by the style of the official liquidator of the
particular company in respect of which he acts, and not by his individual
name.
325. Appointment
and powers of provisional manager:-
(1) At any time after
the presentation of winding up petition and before the making of a
winding up order, the Court may appoint a person eligible for appointment
as official liquidator under section 321 to be provisional manager.
(2) Before appointing
a provisional manager, the Court shall give notice to the company
and afford to it a reasonable opportunity to make its representations,
of any, unless, for special reasons to be recorded, the Court thinks
fit to dispense with such notice.
(3) Where a provisional
manager is appointed by the Court, the Court may limit and restrict
his powers by the order appointing him or by a subsequent order; but
otherwise he shall have the same powers as a liquidator.
(4) Unless the Court
directs otherwise the provisional manager shall cease to hold office
as provisional manager on the winding up order being made.
326. General
provisions as to liquidators:-
(1) The official liquidator
shall conduct the proceedings in winding up the company any perform
such duties in reference thereto as the Court may impose.
(2) The acts of a
liquidator shall be valid, notwithstanding any defect that may afterwards
be discovered in his appointment or qualification:
Provided that nothing
in this sub-section shall be deemed to give validity to acts done
by a liquidator after his appointment has been shown to be invalid.
(3) The winding up
proceedings shall be completed by the official liquidator with a period
of one year from the date of commencement of winding up:
Provided that the
Court may, on the application of the official liquidator, grant extension
by one month at any one time but the extensions so granted shall not
exceed a period of six months in all and shall be allowed only for
the reason that any proceedings for or against the company are pending
in a Court superior to the Court in which liquidator proceedings are
in progress.
(4) If an official
liquidator is convicted of misfeasance, or breach of duty or other
lapse or default in relation to winding up proceedings of a company,
he shall cease to be the official liquidator of the company and shall
also become disqualified, for a period of five years from such conviction,
from being the liquidator or to hold any other office including that
of a director, in any company and if he already holds any such office
he shall forthwith be deemed to have ceased to hold such office.
(5) The registrar
and the Authority shall take cognizance of any lapse, delay or other
irregularity on the part of the official liquidator and may, without
prejudice to any other action under the law, report the same to the
Court.
327. Receiver
not to be appointed of assets with liquidator:-
A receiver shall not
be appointed of assets in the hands of a liquidator except by, or
with they leave of, the Court.
328. Statement
of affairs to be made to official liquidator:-
(1) Where the Court
has made a winding up order or appointed an official liquidator or
provisional manager, there shall be made out and submitted to the
official liquidator or provisional manager, there shall be made out
and submitted to the official liquidator or provisional manager a
statement as to the affairs of the company in the prescribed form,
verified by an affidavit, and containing the following particulars,
namely::-
(a) the assets of
the company, stating separately the cash balance in hand and at the
bank, if any, and the negotiable securities, if any, held by the company;
(b) the debts and
liabilities of the company;
(c) the names, residences
and occupations of the creditors of the company, stating separately
the amount of secured debts and unsecured debts, and, in the case
of secured debts particulars of the securities given, their value
and the dates when they were given;
(d) the debts due
to the company and the names, residences and occupations of the persons
from whom they are due and the amount likely to be realised therefrom;
(e) where any property
of the company is not in its custody or possession, the place where
and the person in whose custody or possession such property is;
(f) full address of
the places where the business of the company was conducted during
the six months preceding the relevant date and the names and particulars
of the persons in charge of the same;
(g) details of any
pending suits or proceedings in which the company is a party; and
(h) such other particulars
as may be prescribed or as the Court may order or the official liquidator
or provisional manager may require in writing, including any information
relating to secret reserves and personal assets of directors.
(2) The statement
shall be submitted and verified by person who are at the relevant
date the directors any by the persons who are at that date the chief
executive and secretary of the company, or by such of the persons
hereafter in this sub-section mentioned as the official liquidator
or provisional manager, subject to the direction of the Court, may
require to submit and verify the statement, that is to say, persons:-
(a) who are or have
been directors, chief executives or officers of the company within
one year from the relevant date;
(b) who have taken part in the formation
of the company at any time within one year before the relevant date;
(c) who are in the
employment of the company, or have been in the employment of the company
with the said year, and are in the opinion of the official liquidator
or provisional manager capable of giving the information required.
(d) who are or have
been within the said year officers of, or in the employment of, a
company which is, or within the said year was, an officer of the company
to which the statement relates.
(3) The statement
shall be submitted within twenty-one days from the relevant date,
or within such extended time not exceeding forty-five days from the
date as the official liquidator or provisional manager or the Court
may, for special reason, appoint.
(4) Any person making,
or concurring in making, the statement and affidavit required by this
section shall be allowed, and shall be paid by the official liquidator
or provisional manager, as the case may be, out of the assets of the
company, such costs and expenses incurred in and about the preparation
and making of the statement and affidavit as the official liquidator
or provisional manager may consider reasonable, subject to an appeal
to the Court.
(5) If any person,
without reasonable excuse, make default in complying with the requirements
of this section, he shall be liable to a fine not exceeding five hundred
rupees for every day during which the default continues.
(6) Without prejudice
to the operation of imposing penalties in respect of any such default
as aforesaid, the Court which makes the winding up or appoints a provisional
manager may take cognizance of any offence under sub-section (5) and
try the offence itself in accordance with the procedure laid down
in the Code of Criminal Procedure, 1898 (Act V of 1898), for the trial
of cases by Magistrates and further direct the persons concerned to
comply with the provision of this section within such time as may
be specified by it.
(7) Any person stating
himself in writing to be a creditor or contributory of the company
shall be entitled, by himself or by his agent, at all reasonable times,
on payment of the prescribed fee, to inspect the statement submitted
in pursuance of this section, and to a copy thereof or extract there
from.
(8) Any person untruthfully
so stating himself to be a creditor or contributory shall be guilty
of an offence under section 182 of the Pakistan Penal Code, 1860 (Act
XLV of 1860), and shall, on the application of the official liquidator
or provisional manager, be punishable accordingly.
(9) In this section,
the expression "the relevant date" means, in a case where
a provisional manager is appointed, the date of his appointment, and,
in a case where no such appointment is made, the date of the winding
up order.
329. Report
by official liquidator:-
(1) In a case where
a winding up order is made, the official liquidator shall, as soon
as practicable after receipt of the statement to be submitted under
section 328 and not later than thirty days, or such further period
not exceeding thirty days as the Court may allow, from the date of
the winding up order submit a preliminary report to the Court:-
(a) as to the amount
of capital issued, subscribed, and paid up, and the estimated amount
of assets and liabilities, giving separately, under the heading of
assets, particulars of:-
(i) cash, bank balances
and negotiable securities;
(ii) debts due from
contributories;
(iii) debts due to
the company and securities, if any, available in respect thereof;
(iv) movable and immovable
properties belonging to the company;
(v) unpaid calls;
and
(b) if the company
has failed, as to the cause of the failure; and
(c) whether in his
opinion further inquiry is desirable as to any matter relating to
the promotion, formation, or failure of the company, or the conduct
of its business.
(2) The official liquidator
may also, if he thinks fit, make a further report, or further reports,
stating the manner in which the company was promoted or formed and
whether in his opinion any fraud has been committed by any person
in its promotion or formation, or by any director or other officer
of the company in relation to the company since its formation, and
any other matter which, in his opinion, it is desirable to bring to
the notice of the Court.
(3) If the official
liquidator states in any such report or further report that in his
opinion a fraud has been committed as aforesaid, the Court shall have
the further power provided in sections 351, 352 and 353.
(4) A certified copy
of the reports aforesaid shall also be sent to the registrar simultaneously
with their submission to the Court.
330. Custody
of company's property:-
(1) The provisional
manager or official liquidator, as the case may be, shall take into
his custody or under his control, all the books and papers, property,
effects and actionable claims belonging to or to which the company
is or appears to be entitled; and all persons who are or have been
directors, chief executives, managers, officers, servants, bankers,
auditors or agents of the company and who may be having in their knowledge,
custody, control or charge, directly or under them any such books
or papers, property, effects and actionable claims, shall forthwith
report and hand over or cause to be handed over possession to the
liquidator of all such items and furnish to the liquidator such information
and explanations as he may require and any default or failure on their
part shall be punishable with imprisonment of either description which
may extend to one year and with fine which may extend to ten thousand
rupees and the Court may direct the books or papers, property and
effects to be delivered to the liquidator in case of default or failure,
and in the event of non-compliance with the directive, to order the
person in default to pay further amount by way of compensation equal
the value of the property as the Court may determine.
(2) For the purpose
of enabling the provisional manager or the official liquidator, as
the case may be, to take in to his custody or under his control any
property, effects, actionable claims or books of account or other
documents to which the company is or appears to be entitled, the provisional
manager or the official liquidator, as the case may be, may by writing
request the District Magistrate within whose jurisdiction such property,
effects, or actionable claims or books of account or other documents
may be found to take possession thereof, and the District Magistrate
shall thereupon, after such notice as he may think fit to give to
any party, take possession of such property, effects, actionable claims,
books of account or other documents and deliver possession thereof
to the provincial manager or the official liquidator, as the case
may be.
(3) For the purpose
of securing compliance with the provisions of sub-section (2), the
District Magistrate may, take or cause to be taken such steps, and
use or cause to be used such force, as may in his opinion be necessary.
(4) All the property
and effects of the company shall be deemed to be in the custody of
the Court as from the date of the order for the winding up of the
company.
331. Committee
of inspection in compulsory winding up:-
(1) When a winding
up order has been made by the Court, the liquidator shall within thirty
days summon separate meetings of the creditors and contributories
of the company for the purpose of determining whether or not an application
is to be made to the Court for the appointment of a committee of inspection
to act with the liquidator, and who are to be the members of the committee
if appointed:
Provided that, where
the winding up order has been made on the ground that the company
is unable to pay its debts, it shall not be necessary for the liquidator
to summon a meeting of the contributories.
(2) The Court may
make any appointment and order required to give effect to any such
determination, and if there is a difference between the determinations
of the meetings of the creditors and contributories in respect of
the matters aforesaid the Court shall decide the difference and make
such order thereon as the Court may think fit.
332. Constitution
and proceedings of committee of inspection:-
(1) A committee of
inspection appointed under section 331 shall consist of creditors
and contributories of the company or persons holding general powers-of-attorney
from creditors or contributories in such proportions as may be agreed
on by the meetings of creditors and contributories or as, in case
of difference, may be determined by the Court:
Provided that, where
a winding up order has been made on the ground that a company is unable
to pay its debts, the committee shall consist of creditors or persons
holding general powers-of-attorney from creditors.
(2) The committee
shall meet at such times as it may from time to time appoint, and,
failing such appointment, at least once a month, and the liquidator
or any member of the committee may also call a meeting of the committee
as and when he thinks necessary.
(3) The committee
may act by a majority of its members present at a meeting but shall
not act unless a majority of the members of the committee are present.
(4) A member of the
committee may resign by notice in writing signed by him and delivered
to the liquidator.
(5) If a member of
the committee becomes bankrupt or compounds or arranges with his creditors
or is absent from five consecutive meetings of the committee without
the leave of those members who together with himself represent the
creditors or contributories, as the case may be, his office shall
thereupon become vacant.
(6) A member of the
committee may be removed by an ordinary resolution at a meeting of
creditors, if he represents creditors, or at a meeting of contributories,
if he represents contributories, of which seven days notice has been
given, stating the object of the meeting.
(7) On a vacancy occurring
in the committee the official liquidator shall forthwith summon a
meeting of creditors or of contributories, as the case may require,
to fill the vacancy, and the meeting may, by resolution, reappoint
that same or appoint another creditor or contributory to fill the
vacancy:
Provided that, if
the official liquidator, having regard to the position in the winding
up, is of the opinion that it is unnecessary for the vacancy to be
filled, he may apply to the Court and the Count may make an order
that the vacancy shall not be filled, or shall not be filled except
in such circumstances as may be specified in the order.
(8) The continuing
members of the committee, if not less than two, may act notwithstanding
any vacancy in the committee.
333. Powers
of official liquidator:-
(1) The liquidator
in a winding up by the Court shall have power, with the sanction either
of the Court or of the committee of inspection:-
(a) to institute or
defend any suit, action, prosecution or other legal proceeding, civil
or criminal, in the name and on behalf of the company;
(b) to carry on the
business of the company so far as may be necessary for the beneficial
winding up thereof;
(c) to pay any classes
of creditors in full;
(d) to make any compromise
or arrangement with creditors or persons claiming to be creditors,
or having or alleging themselves to have any claim, present or future,
certain or contingent, ascertained or sounding only in damages against
the company, or whereby the company may be rendered liable;
(e) to compromise
all calls and liabilities to calls, debts and liabilities capable
of resulting in debts, and all claims, present or future, certain
or contingent, ascertained or sounding only in damages, subsisting
or supposed to subsist between the company and a contributory or alleged
contributory or other debtor or person apprehending liability to the
company and all questions in on such terms as may be agreed, and take
any security for the discharge of any such calls, debt, liability,
or claim and give a complete discharge in respect thereof;
(f) to sell the movable
and immovable property and things in action of the company by public
auction or private contract, with power to transfer the whole thereof
to any person or company or to sell the same in parcels.
(2) Subject to any
general or special direction of the Court or of the committee of inspection,
the liquidator in winding up by the Court shall have power:-
(a) 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;
(b) to prove, rank
and claim in the bankruptcy, insolvency or sequestration of and contributory
for any balance against his estate, and to receive dividends in the
bankruptcy, insolvency or sequestration in respect of that balance,
as a separate debt due from the bankrupt or insolvent, and ratably
with the other separate creditors;
(c) draw, accept,
make and endorse any bill of exchange 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 the bill or note had been drawn,
accepted, made or endorsed by or on behalf of the company in the course
of its business;
(d) to raise on the
security of the assets of the company any money requisite;
(e) to take 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 liquidator to
take out the letters of administration or recover the money, be deemed
to be due to the liquidator himself;
(f) to appoint an
agent to do any business which the liquidator is unable to do himself;
and
(g) to do all such
other acts and things as may be necessary for winding up the affairs
of the company and distributing its assets.
(3) The exercise by
the liquidator in a winding up by the Court of the powers conferred
by this section shall be subject to the control of the Court, and
any creditor or contributory or the registrar may apply to the Court
with respect to any exercise or proposed exercise of any of the said
powers.
334. Discretion
of official liquidator:-
The Court may provide
by any order that the official liquidator may, where there is no committee
of inspection, exercise any of the powers mentioned in paragraph (a)
or paragraph (b) of sub-section (1) of section 33 without the sanction
or intervention of the Court.
335. Provision
for assistance to official liquidator:-
The official liquidator
may, with the sanction of the committee of section or, where there
is no committee of inspection, with the sanction of the Court, appoint
a person entitled to appear before the Court or such person as may
be prescribed to assist him in the performance of his duties:
Provided that, where
the official liquidator is an advocate, he shall not appoint his partner
unless the latter to act without remuneration.
336. Liquidator
to keep books containing proceedings of meetings, etc:-
The official liquidator
of a company which is being wound up by the Court shall keep, the
manner prescribed, proper books and papers in which he shall cause
to be made entries of minutes of proceedings at meetings and of such
other matters as may be prescribed, and any creditor or contributory
may, subject to the control of the Court, personally or by his agent
inspect any such books.
337. Liquidator's
account:-
(1) Every official
liquidator shall, at such times as may be prescribed but no less than
twice in each year during his tenure of office, present to the Court
an account of his receipts and payments and dealings as liquidator,
together with such further information as may be prescribed.
(2) The account and
information as aforesaid shall be in the prescribed form, shall be
add in duplicate, and shall be verified by a declaration in the prescribed
form.
(3) The Court shall
cause the account and the books and papers of the official liquidator
to be audited in such manner as it thinks fit and for the purpose
of the audit the liquidator shall furnish the Court with such books
and information as the Court may require, and the Court may at any
time require the production of and inspect or cause to be inspected
any books or papers kept by the liquidator.
(4) When the account
and the books and papers have been audited, one copy thereof alongwith
the auditor's report shall be filed and kept by the Court, and the
other copy alongwith the auditor's report shall be delivered to the
registrar for filing; and each copy shall be open to the inspection
of any person on payment prescribed fee.
(5) The official liquidator
shall cause a copy of the account when audited or a summary thereof
to be sent by post to every creditor and contributory.
(6) The Federal Government
may, by notification in the official Gazette, require that the account
and information referred to in sub-section (1) shall be furnished
to an officer to be designated by it for the purpose and that such
officer shall cause the accounts to be audited; and, upon the publication
of such notification, reference to "Court" in the proceeding
provision of this section shall be construed as a reference to such
officer.
338. Exercise
and control of liquidator's powers:-
(1) Subject to the
provisions of this Ordinance, the official liquidator of a company
which is being wound up by the Court shall, in the administration
of the assets of the company and in the distribution thereof among
its creditors, have regard to any directions that may be given by
resolution of the creditors or contributories at any general meeting
or by the committee of inspection, and any directions given by the
creditors or contributories at any general meeting shall in case of
conflict be deemed to override any directions given by the committee
of inspection.
(2) The official liquidator
may summon general meetings of the creditors or contributories for
the purpose of ascertaining their wishes, and it shall be his duty
to summon meetings as such times as the creditors or contributories,
by resolution, may direct, or whenever requested in writing to do
so by one-tenth in value of the creditors or contributories, as the
case may be.
(3) The official liquidator
may apply to the Court for direction in relation to any particular
matter arising in the winding up.
(4) Subject to the
provisions of this Ordinance, the official liquidator shall use his
own discretion in the administration of the assets of the company
and in the distribution thereof among the creditors.
(5) If any person
is aggrieved by any act or decision of official liquidator, that person
may apply to the Court, and the Court may confirm, reverse or modify
the act or decision compained of, and make such order as it thinks
just in the circumstances.
339. Settlement
of list of contributories and application of assets:-
(1) As soon as may
be after making a winding up order, the Court shall settle a list
of contributories, with power to rectify the register of members in
all cases where rectification is required in pursuance of this Ordinance
and shall cause the assets of the company to be collected and applied
in discharge of its liabilities.
Provided that, where
it appears to the Court that it will not be necessary to make calls
on or adjust the rights of contributories, the Court may dispense
with the settlement of a list of contributories.
(2) In settling the
list of contributories, the Court shall distinguish between persons
who are contributories in their own right and persons who are contributories
as being representatives of, or liable for the debts of, others.
340. Power
to require delivery of property:-
Without prejudice
to the obligation imposed under any other provisions, the Court may,
at any time after making a winding up order, require any contributory
for the time being on the list of contributories and any trustee,
receiver, banker, agent officer or employee or past officer or employee
or authority of the company to pay, deliver, convey, surrender or
transfer forthwith, or within such time as the Court directs, to the
official liquidator any money, property or books and papers including
documents in his hands to which the company is prima facie entitled.
341. Power
to order payment of debts by contributory:-
(1) The Court may,
at any time after making a winding up order, make an order on any
contributory for the time being settled on the list of contributories
to pay, in manner directed by the order, any money due from him or
from the estate of the person whom he represents to the company, exclusive
of any money payable by him or the estate by virtue of any call in
pursuance of this Ordinance.
(2) The Court in making
such an order may:-
(a) in the case of
an unlimited company, allow to the contributory by way of set-off,
any money due to him or to the estate which the represents from the
company on any independent dealing or contract with the company, but
not any money due to him as a member of the company inrespect of any
dividend or profit; and
(b) in the case of
a limited company, make to any director whose liability is unlimited
or to his estate the like allowance.
(3) In the case of
any company, whether limited or unlimited, when all the creditors
are paid in full, any money due on any account whatever to a contributory
form the company may be allowed to him by way of set-off any subsequent
call.
342. Power
of Court to make calls:-
(1) The Court may,
at any time after making a winding up order, and either before or
after it has ascertained the sufficiency of the assets of the company,
make calls on and order payment thereof by all or any of the contributories
for the time being settled on the list of the contributories to the
extent of their liability, for repayment of any money which the Court
considers necessary to satisfy the debts and liabilities of the company,
and the costs, charges and expenses of winding up, and for the adjustment
of the rights of the contributories among themselves.
(2) In making the
call the Court may take into consideration the probability that some
of the contributories may party or wholly fail to pay the call.
343. Power
to order payment into bank:-
(1) The Court may
order any contributory, purchaser or other person from whom, any money
is due to the company to pay the same into the account of the official
liquidator in a scheduled bank instead of to the official liquidator,
and any such order may be enforced in the same manner as if it had
directed payment to the official liquidator.
(2) Information about
the making deposited shall be sent by the person paying it to the
official liquidator within three days of the date of payment.
344. Regulation
of account with Court:-
All moneys, bills,
hundis, notes and other securities paid and delivered into the scheduled
bank where the official liquidator of the company may have his account,
in the event of a company being wound up by the Court, shall be subject
in all respect to the orders of the Court.
345. Order
on contributory conclusive evidence:-
(1) An order made
by the Court on a contributory shall, subject to any right of appeal,
be conclusive evidence that the money, if any, thereby appearing to
be due or ordered to be paid is due.
(2) All other pertinent
matters stated in the order shall be taken to be truly stated as against
all persons, and in all proceedings whatsoever.
346. Power
to exclude creditors not proving in time:-
The Court may fix
a time or times within which creditors are to prove their debts or
claims, or to be excluded from the benefit of any distribution made
before those debts are proved.
347. Adjustment
or rights of contributories:-
The Court shall adjust
the rights of the contributories among themselves, and distribute
any surplus among the persons entitled thereto.
348. Power
to order costs:-
The Court may, in
the event of the assets being insufficient to satisfy the liabilities,
make an order as to the payment out of the assets of the costs, charges
and expenses incurred in the winding up in such order or priority
as the Court thinks just.
349. Distribution
by official liquidator:-
Subject to any directions
give by the Court, the official liquidator shall, within thirty days
of the coming into his hands of funds sufficient to distribute among
the creditors or contributories after providing for expenses of the
winding up or for other preferential payments as provided in this
Ordinance, distribute in accordance with the provisions of this Ordinance:
Provided that such
portion of the funds as may be required for meeting any claim against
the company which may be sub judice or subject-matter of adjudication
or assessment shall not be distribute till the claim is finally settled:
Provided further that any amounts retained
as aforesaid shall be invested by the official liquidator in Khas
Deposit Certificates and the same shall be deposited by him with the
Court and the distribution thereof shall be made by him after the
pending claims are settled.
PART-XI-WINDING
UP
PRELIMINARY
297. Modes
of winding up:-
(1) The winding up
of a company may be either:-
(i) by
the Court; or
(ii) voluntary;
or
(iii) subject to the
supervision of the Court.
(2) Save as otherwise
expressly provided, the provisions of this Ordinance with respect
to winding up shall apply to the winding up of a company in any of
the modes specified in sub-section (1).
CONTRIBUTORIES
298. Liability
as contributories of present and past members:-
(1) In the event of
a company being would up, every present and past member shall, subject
to the provision of section 299, be liable to contribute to the assets
of the company to an amount sufficient for payment of its debts and
liabilities and the costs, charges and expenses of the winding up,
and for the adjustment of the rights of the contributories among themselves,
with the qualifications following, that is to say:-
(i) a past member
shall not be liable to contribute if he has ceased to be a member
for one year or upwards before the commencement of the winding up;
(ii) a past member
shall not be liable to contribute in respect of any debt or liability
of the company contracted after he ceased to be a member;
(iii) a past member
shall not be liable to contribute unless it appears to the Court that
the present members are unable to satisfy the contributions required
to be made by them in pursuance of this Ordinance;
(iv) in the case of
a company limited by shares, no contribution shall be required from
any past or present member exceeding the amount, if any, unpaid on
the shares in respect of which he is liable as such member;
(v) in the case of
a company limited by guarantee, no contribution shall, subject to
the provisions of sub-section (2), be required from any past or present
member exceeding the amount undertaken to be contributed by him to
the assets of the company in the event of its being wound up;
(vi) nothing in this
Ordinance shall invalidated any provision contained in any policy
of insurance or other contract whereby the liability of individual
members on the policy or contract is restricted, or whereby the funds
of the company are alone made liable in respect of the policy or contract;
and
(vii) a sum due to any past or present
member of a company in his character as such by way of dividends,
profits or otherwise, shall not be deemed to be a debt of the company
payable to that member in a case of compensation between himself and
any other creditor not being a member of the company, but any such
sum may be taken into account for the purpose of the final adjustment
of the rights of the contributories among themselves.
299. Liability
of directors whose liability is unlimited:-
In the winding up
of a limited company any director, whether past or present, whose
liability is, in pursuance of his Ordinance, unlimited, shall, in
addition to his liability, if any, to contribute as an ordinary member,
be liable to make a further contribution as if he were, at the commencement
of the winding up, a member of any unlimited company:
Provided that:-
(i) a past director
shall not be liable to make such further contribution if he has ceased
to hold office for a year or upwards before the commencement of the
winding up;
(ii) a past director
shall not be liable to make such further contribution in respect of
any debt or liability of the company contracted after he ceased to
hold office;
(iii) subject to the
articles, a director shall not be liable to make such further contribution
unless the Court deems it necessary to require that contribution in
order to satisfy the debts and liabilities of the company, and the
costs, charges and expenses of the winding up.
300. Definition
of "contributory":-
The term "contributory"
means every person liable to contribute to the assets of a company
in the event of its being wound up, and includes the holder of any
shares which are fully paid-up; and, in all proceedings for determining,
and all proceedings prior to the final determination, of, the persons
who are to be deemed contributories any person alleged to be a contributory.
301. Nature
of liability of contributory:-
(1) The liability
of contributory shall create a debt accruing due from him at the time
when his liability commenced, but payable at the time specified in
calls made on him for enforcing the liability.
(2) No claim founded
on the liability of a contributory shall be cognizable by the Court
of Small Causes.
302. Contributories
in case of death of member:-
(1) If a contributory
dies either before or after he has been placed on the list of contributories,
his legal representatives shall be liable, in a due course of administration,
to contribute to the assets of the company in discharge of his liability,
and shall be contributories accordingly.
(2) If the legal representatives
make default in paying and money ordered to be paid by them, proceedings
may be taken for administering the property of the deceased contributory,
and of compelling payment thereout of the money due.
303. Contributory
in case of insolvency of member:-
If a contributory
is adjudged insolvent either before or after he has been placed on
the list of contributories, then:-
(a) his assignees
in insolvency shall represent him for all the purposes of the winding
up, and shall be contributories accordingly, and may be called on
to admit to proof against the estate of the insolvent, or otherwise
to allow to be paid out of his assets in due course of law, any money
due from the insolvent in respect of his liability to contribute to
the assets of the company; and
(b) there may be proved against the
estate of the insolvent the estimated value of his liability to future
calls as well as calls already made.
304. Contributories
in case of winding up of a body corporate which is a member:-
If a body corporate
which is a contributory is ordered to be wound up, either before or
after it has been placed on the list of contributories:-
(a) the liquidator
of the body corporate shall represent if for all purposes of the winding
up of the company and shall be a contributory accordingly, and may
be called on to admit to proof against the assets of the body corporate,
or otherwise to allow to be paid out of its assets in due course of
law, any money due from the body corporate in respect of its liability
to contribute to the assets of the company; and
(b) there may be proved
against the assets of the body corporate the estimated value of its
liability to future calls as well as calls already made.
WINDING UP
BY COURT
CASES IN
WHICH COMPANIES MAY BE WOUND UP BY COURT
305. Circumstances
in which company may be wound up by Court:-
A company may be wound
up by the Court:-
(a) if the company
has, by special resolution, resolved that the company be wound up
by the Court.
(b) if default is
made in delivering the statutory report to the registrar or in holding
the statutory meeting or any two consecutive annual general meetings;
(c) if the company
does not commence its business within a year from its incorporation,
or suspends its business for a whole year;
(d) if the number
of members is reduced, in the case of private company, below two or,
in the case of any other company, below seven;
(e) if the company
is unable to pay its debts;
(f) if the company
is:-
(i) conceived or brought
forth for, or is or has been carrying on, unlawful or fraudulent activities;
(ii) carrying on business
not authorised by the memorandum;
(iii) conducting its
business in a manner oppressive to any of its members or persons concerned
with the formation or promotion of the company or the minority shareholders;
(iv) run and managed
by persons who fail to maintain proper and true accounts, or commit
fraud, misfeasance or malfeasance in relation to the company; or
(v) managed by persons
who refuse to act according to the requirements of the memorandum
or articles or the provisions of this Ordinance or fail to carry out
the directors or decisions of the Court or the registrar or the Authority
given in the exercise of powers under this Ordinance;
(g) if, being a listed
company, it ceases to be such company; or
(h) if the Court is
of opinion that it is just and equitable that the company should be
wound up.
Explanation.:-The
promotion or the carrying on of any scheme or business, except the
business carried on under the provisions of the Insurance Act, 1938
(IV of 1938), howsoever described, whereby, in return for a deposit
or contribution, whether periodically or otherwise, or a sum of money
in cash or by means of coupons, certificates, tickets or other documents,
payment, at future date or dates of money or grant of property, right
or benefit, directly or indirectly, and whether with or without any
other right or benefit, determined by chance or lottery or any other
like manner, is assured or promised shall be deemed to be an unlawful
activity.
Explanation II.:-"Monitory
shareholders" means shareholders together holding not less than
twenty percent, of the equity share capital of the company.
306. Company
when deemed unable to pay its debts:-
(1) A company shall
be deemed to be unable to pay its debts:-
(a) if a creditor,
by assignment or otherwise, to whom the company is indebted in a sum
exceeding one per cent of its paid-up capital or fifty thousand rupees,
whichever is less, than due, has served on the company, by causing
the same to be delivered by registered post or otherwise, at its registered
office, a demand under his hand requiring the company to pay the sum
so due and the company has for thirty days thereafter neglected to
pay the sum, or to secure or compound for it to the reasonable satisfaction
of the creditor; or
(b) if execution or
other process issued on a decree or order of any Court or any other
competent authority in favour of a creditor of the company is returned
unsatisfied in whole or in part; or
(c) if it is proved
to the satisfaction of the court that the company is unable to pay
its debts, and, in determining whether a company is unable to pay
its debts, the Court shall take into account the contingent and prospective
liabilities of the company.
(2) The demand referred
to in clause (a) of sub-section (1) shall be deemed to have been duly
given under the hand of the creditor if it is signed by an agent or
legal adviser duly authorised on his behalf, or in the case of a firm
if it is signed by such agent or legal adviser or by any member of
the firm on behalf of the firm.
TRANSFER
OF PROCEEDINGS
307. Transfer
of proceedings to other Courts:-
Where the High Court
makes an order for winding up a company under his Ordinance, it may,
if it thinks fit, direct all subsequent proceedings to be had in a
Civil Court empowered by the Federal Government under sub-section
(1) of section 7 or, with the consent of any other High Court, in
such High Court or in a Civil Court subordinate thereto; and thereupon,
for the purposes of the winding up of the company, such High Court
of Civil Court, as the case may be, shall be deemed to be the "Court"
within the meaning of this Ordinance and shall have all the powers
and jurisdiction of the Court thereunder.
308. Withdrawal
and transfer of winding up from one Court to another:-
If, during the progress
of a winding up in a Civil Court, it is made to appear to the High
Court that the same could be more conveniently proceeded with in the
High Court or in any Civil Court empowered by the Federal Government
under sub-section (1) of section 7 the High Court may, as the case
may require:-
(a) withdraw the case
and proceed with the winding up itself; or
(b) transfer the case
to such Civil Court, and thereafter the winding up shall proceed in
such Civil Court.
PETITION
FOR WINDING UP
309. Provisions
as to application for winding up:-
An application to
the Court makes an order for winding up a company under this Ordinance,
if may, if it thinks fit, direct all subsequent proceedings to be
had in a Civil Court empowered by the Federal Government under sub-section
(1) of section 7 or, with the consent of any other High Court, in
such High Court or in a Civil Court subordinate thereto; and thereupon,
for the purposes of the winding up of the company, such High Court
or Civil Court, as the case may be, shall be deemed to be the "Court"
within the meaning of this Ordinance and shall have all the powers
and jurisdiction of the Court thereunder.
Provided that:-
(a) a contributory
shall not be entitled to present a petition for winding up a company
unless:-
(i) either the number
of members is reduced, in the case of a private company, below two,
or, in the case of any other company, below seven; or
(ii) the shares in
respect of which he is a contributory or some of them either were
originally allotted to him or have been held by him, and registered
in his name, for at least six months during the eighteen months before
the commencement of the winding up, or have devolve on him through
the death of a former holder;
(b) the registrar
shall not be entitled to present a petition for the winding up of
a company unless the previous sanction of the Authority has been obtained
to the presentation of the petition:
Provided that no such
sanction shall be given unless the company has first been afforded
an opportunity of making a representation and of being heard;
(c) the Authority
or a person authorised by the Authority in that behalf shall not be
entitled to present a petition for the winding up of a company unless
an investigation into the affairs of the company has revealed that
it was formed for any fraudulent or unlawful purpose or that it is
carrying on a business not authorised by its memorandum or that its
business is being conducted in a manner oppressive to any of its members
or persons concerned in the formation of the company or that its management
has been guilty of fraud, misfeasance or other misconduct towards
the company or towards any of its members; and such petition shall
not be presented or authorised to be presented by the Authority unless
the company has been afforded an opportunity of making a representation
and of being heard;
(d) the Court shall
not give a hearing to a petition for winding up a company by a contingent
or prospective creditor until such security for costs has been given
as the Court thinks reasonable and until a prima facie case for winding
up has been established to the satisfaction of the Court;
(e) the Court shall
not give a hearing to a petition for winding up a company by the company
until the company has furnished with its petition, in the prescribed
manner, the particulars of its assets and liabilities and business
operations and the suits or proceedings pending against it.
310. Right
to present winding up petition where company is being wound up voluntarily
or subject to Court's supervision:-
(1) Where a company
is being wound up voluntarily or subject to the supervision of the
Court, a petition for its winding up by the Court may be presented
by any person authorised to do so under section 309 and subject to
the provisions of that section.
(2) The Court shall
not make a winding up order on a petition presented to it under sub-section
(1) unless it is satisfied that the voluntary winding up or winding
up subject to the supervision of the Court cannot be continued with
due regard to the interests of the creditors or contributories or
both.
COMMENCEMENT
OF WINDING UP
311. Commencement
of winding up by Court:-
A winding up of a
company by the Court shall be deemed to commence at the time of the
presentation of the petition for the winding up.
POWERS OF
COURT HEARING APPLICATION
312. Hearing
of winding up petition by the Court:-
A petition for winding
up of a company shall come up for regular hearing, be proceeded with
and decided in the manner laid down in section 9.
313. Court
may grant injunction:-
The Court may, at
any time after presentation of the petition for winding up a company
under this Ordinance, and before making an order for its winding up,
upon the application of the company itself or of the any its creditors
or contributories, restrain further proceedings in any suit or proceeding
against the company, upon such terms as the Court thinks fit.
314. Power
of Court on hearing petition:-
(1) On hearing a winding
up portion the Court may dismiss it with or without costs, or adjourn
the hearing conditionally or unconditionally subject to the limitation
imposed in section 9 or make any interim order, or any order for winding
up the company or any other order that it deems just; but the court
shall not refuse to make a winding up order on the ground only that
the assets of the company have been mortgaged to an amount equal to
or in excess of those assets, or that the company has no assets.
(2) Where the petition
is presented on the ground that it is just and equitable that the
company should be wound up, the Court may refuse to make an order
of winding up, if it is of opinion that some other remedy is available
to the petitioners and that they are acting unreasonably is seeking
to have the company wound up instead of pursuing that other remedy.
(3) Where the petition
is presented on the ground of default in delivering the statutory
report or in holding the statutory meeting or any two consecutive
annual general meetings, the Court may, instead of making a winding
up order, direct that the statutory report shall be delivered or that
a meeting shall be held and order the costs to be paid by any persons
who, in the opinion of the Court, are responsible for the default.
(4) If, on hearing
a petition, the court is of opinion that, although the facts would
justify the making of a winding up order, the making of such order
would unfairly prejudice the members or the creditors, the Court may,
instead of making an order for winding up the company, make such order
as it thinks fit in the circumstances for regulating the conduct of
the affairs of the company and bringing to an end the matters complained
of, including an order for a change in the management of the company.
(5) Where the Court
makes an order for the winding up of a company, it shall forthwith
cause intimation thereof to be sent to the official liquidator appointed
by it and to the registrar.
315. Copy
of winding up order to be filed with registrar:-
(1) Within fifteen
days from the date of the making of the winding up order, the petitioner
in the winding up proceedings and the company shall file a certified
copy of the order with the registrar.
(2) If default is
made in complying with the foregoing provision, the petitioner or,
as the case may require, the company, and every officer of the company
who is in default, shall be punishable with fine which may extend
to one hundred rupees for each day during which the default continues.
(3) On the filing
of a certified copy of a winding up order, the registrar shall forthwith
make a minute thereof in his books relating to the company, and shall
simultaneously notify in the official Gazette that such an order has
been made.
(4) Such order shall
be deemed to be notice of discharge to the servants of the company,
except when the business of the company is continued
316. Suits
stayed on winding up order:-
(1) When a winding
up order has been made or a provisional manager has been appointed,
no suit or other legal proceeding shall be proceeded with or commenced
against the company except by leave of the Court, and subject to such
terms as the Court may impose.
(2) The Court which
is winding up the company shall, notwithstanding anything contained
in any other law for the time being in force, have jurisdiction to
entertain, or dispose, of, any suit or proceeding by or against the
company.
(3) Any suit or proceeding
by or against the company which is pending in any Court other than
that in which the winding up of the company is proceeding may, notwithstanding
anything contained in any other law for the time being in force, be
transferred to and disposed of by the Court.
317. Court
may require expeditious disposal of suits, etc:-
(1) Notwithstanding
anything contained in any other law:-
(a) if any suit or
proceedings, including an appeal, by or against the company which
is allowed to be proceeded with in any Court other than the Court
in which winding up of the company is proceeding, the Court may issue
directions to that other court if that Court is subordinate to it
and, in any other case, make a request to that other Court for expeditious
disposal of the pending suit or proceedings by or against the company;
and
(b) if any proceedings,
including proceedings for assessment or recovery of any tax, duty
or levies or appeal or review petition against any order is pending
or is likely to be instituted, before any officer, Tribunal, authority
or other body, the Court may issue direction to that officer, Tribunal,
authority or other body for expeditious action and disposal of the
said proceedings.
(2) Upon issue of
a direction or making of a request as aforesaid, the Court, officer,
Tribunal, authority or body to whom the same is addressed shall, notwithstanding
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