Winding Up of a Company by the NCLT
The winding up of a company by the National Company Law Tribunal rests on the grounds in Section 271 of the Companies Act, 2013. They include a special resolution, fraud, five years of missed filings and the just-and-equitable test. The Tribunal is to decide within 90 days of the petition. We prepare the papers and work with the advocate who appears for you.
What it is
Winding up of a company by the Tribunal is the court-supervised way to end it. A liquidator takes charge, sells the assets, pays the dues and reports to the NCLT, which finally orders the company dissolved.
The law sits in Chapter XX of the Companies Act, 2013 (Sections 271 onwards) and the Companies (Winding Up) Rules, 2020. Since the Insolvency and Bankruptcy Code, 2016, a company that cannot pay its debts goes through the IBC instead, and a solvent company that wants to close on its own terms uses voluntary liquidation under Section 59 of the IBC.
Who it applies to
Your members have voted to close
Under Section 271(a), members pass a special resolution for winding up by the Tribunal. The company’s petition carries a statement of affairs.
You are a shareholder seeking an exit
A contributory can petition if the shares were allotted to them, held in their name for at least six months of the 18 months before winding up starts, or inherited.
The Registrar or government steps in
The Registrar (with prior Central Government sanction), a person the Central Government authorises, or the Central or State Government can petition on their grounds.
Grounds for winding up under Section 271
| Clause | Ground | Who usually petitions |
|---|---|---|
| 271(a) | Special resolution that the Tribunal wind up the company | The company |
| 271(b) | Acts against the sovereignty and integrity of India, security of the State, public order, decency or morality, among others | Central or State Government |
| 271(c) | Fraudulent conduct of affairs or formation, or fraud, misfeasance or misconduct by those managing it | Registrar or person authorised by the Central Government |
| 271(d) | Default in filing financial statements or annual returns for the immediately preceding five consecutive financial years | Registrar |
| 271(e) | The Tribunal thinks it just and equitable | Contributories, often in a deadlock |
A common case: two equal shareholders in a Faridabad auto-parts company stop speaking, and the board cannot meet. One petitions on the just-and-equitable ground. Here is the catch: under Section 273(2), the Tribunal can refuse if another remedy exists and the petitioner is unreasonably ignoring it. An oppression and mismanagement petition under Section 241 is often that remedy.
Why it matters
Ends the company in law
The NCLT’s dissolution order closes the company for good. An abandoned one keeps attracting notices and late fees.
Puts a neutral liquidator in charge
Under Section 275 the Tribunal appoints the liquidator, and assets are sold and dues paid under its supervision.
Gives Section 8 companies an exit
Rule 3(1) of the Removal of Names Rules bars a Section 8 company from strike-off, so winding up or IBC liquidation is its route.
Documents required
For a company petition
- Certified copy of the special resolution
- Board resolution authorising the petition
- Statement of affairs and supporting affidavit
- Latest audited financial statements
For a contributory petition
- Share certificates or register extract proving the holding period
- Evidence of the ground relied on
Company records
- Certificate of incorporation, MOA and AOA
- List of creditors, debtors and assets
- Books of account for the liquidator
How it works
Choose the right route
For winding up of a company, we first check whether strike-off, IBC voluntary liquidation or a Section 241 petition fits better, since Tribunal winding up is slower and costlier.
Build the petition file
We assemble the resolutions, statement of affairs and records under the Winding Up Rules. A practising advocate signs and files the petition before the NCLT bench: Chandigarh for Haryana companies, New Delhi for Delhi.
Serve the Registrar and respond
A copy of the petition goes to the Registrar, who submits views within 60 days. If the Tribunal sees a prima facie case, it directs the company to file objections and a statement of affairs within 30 days.
Hand over to the liquidator
After the order, the Company Liquidator takes charge. Directors hand over audited books within 30 days, and we help answer the liquidator’s queries.
Obtain the dissolution order
Once affairs are wound up, the Tribunal orders dissolution under Section 302.
Timelines
Registrar responds within 60 days
The Registrar gets a copy and submits views within 60 days (Section 272).
Company files its statement within 30 days
On a prima facie case, objections and a statement of affairs are due within 30 days, extendable by 30 (Section 274).
Tribunal decides within 90 days
Section 273 requires the Tribunal to pass its order within 90 days of the petition being presented.
What happens if directors don’t cooperate
Directors face jail or a fine
Failing to file the statement of affairs means imprisonment up to six months, a fine of ₹25,000 to ₹5 lakh, or both (Section 274).
Fraud findings follow the people
Where the ground is fraud or misconduct, the liquidator’s report can lead to action against those responsible.
The Registrar may act first
A Faridabad trading company that stopped work in 2021 and never filed again is heading for Section 271(d). Keep annual ROC filings current and the Registrar has no reason to petition.
Frequently asked questions
On what grounds can the NCLT wind up a company?
Section 271 lists five grounds. They are a special resolution by the company, acts against the sovereignty, security or public order of India, fraud or misconduct, default in filing for five consecutive years, and the just-and-equitable ground. Inability to pay debts is no longer a ground here; it goes to the IBC.
Can a creditor file for winding up under the Companies Act?
Not for unpaid debts. Since the Insolvency and Bankruptcy Code, 2016, inability to pay debts was removed from Section 271. A financial or operational creditor now applies to the NCLT for the corporate insolvency resolution process under the IBC, which can end in liquidation if no resolution plan is approved. We can point you to the right route for your claim.
How long does the NCLT take to decide a winding-up petition?
Section 273 asks the Tribunal to pass its order within 90 days of the petition being presented. Before that, the Registrar has 60 days to submit views, and the company may be given 30 days, plus 30 more in a contingency, for its statement of affairs. Real timelines depend on the bench’s cause list, and we keep you informed at each stage.
What is the difference between winding up and voluntary liquidation?
Voluntary liquidation is under Section 59 of the IBC, for a solvent company with no default. Directors declare solvency and an insolvency professional acts as liquidator. Winding up of a company under Section 271 is ordered by the NCLT on specific grounds and run by a liquidator the Tribunal appoints. For a healthy company that simply wants to close, voluntary liquidation is usually the better fit.
Can shareholders in a deadlock seek winding up?
Yes, on the just-and-equitable ground in Section 271(e), if the contributory meets the holding test in Section 272. But under Section 273(2) the Tribunal may refuse where another remedy exists and the petitioner is acting unreasonably in not using it. An oppression and mismanagement petition under Section 241 is often that remedy. We review both options before anything is filed.
Who acts as liquidator in a Tribunal winding up?
The Tribunal appoints a provisional liquidator or the Company Liquidator under Section 275 when it passes the order. The liquidator takes charge of the assets and books, settles claims and reports to the Tribunal. For a company with assets of book value up to ₹1 crore, Section 361 provides a summary procedure with the Official Liquidator in charge. Directors’ role shifts to cooperation and handover.
Does Taxhint appear before the NCLT?
We handle the company-law work: choosing the route, drafting resolutions, the statement of affairs, financial records and liaison with the liquidator. The petition is settled, signed and argued by a practising advocate, who appears before the NCLT for you. We coordinate between you, the advocate and the liquidator, so the paperwork side never holds the case up.
Can a Section 8 company be wound up?
Yes. A Section 8 company cannot apply for strike-off, because Rule 3(1) of the Removal of Names Rules excludes it. It can be wound up by the Tribunal or liquidated under the IBC. Under Section 8(9), surplus assets go to another Section 8 company with similar objects, or are sold with the proceeds credited to the Insolvency and Bankruptcy Fund. We help plan the transfer early.
Is strike-off a cheaper alternative?
Often, yes. A company that has no assets or liabilities and has not carried on business for two financial years can apply in Form STK-2 under Section 248(2), with a government fee of ₹10,000. It needs a special resolution or consent of 75% of members by paid-up capital. Where there are assets to sell or disputes to settle, strike-off will not work. We tell you honestly which route fits.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
Expect also the NCLT filing fee, advertisement costs, the advocate’s fee and the liquidator’s costs, met from the company’s assets.
Ready to begin?
Tell us why the company should close, and we will map the right lawful route.