Section 271 of the Companies Act, 2013
Section 271 – Circumstances in Which Company May Be Wound Up by the Tribunal
Section 271 of the Companies Act, 2013 sets out the exclusive grounds on which the National Company Law Tribunal (NCLT) may order winding up of a company on a petition under Section 272.
🔍 Grounds for Winding‑Up (Section 271(1))
A company may, on a petition under Section 272, be wound up by the Tribunal if:
Unable to Pay Debts
A creditor’s demand (of at least ₹1 lakh) remains unpaid for 21 days, or
A money‑judgment against the company is unsatisfied, or
The Tribunal is satisfied the company cannot pay its debts.
Special Resolution
The company itself has, by special resolution, resolved that it be wound up by the Tribunal.
Acts Against Public Interest
The company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency, or morality.
Previous Tribunal Order
The Tribunal has already ordered winding up of the company under Chapter XIX (investigation of company affairs).
Fraud or Misconduct
On application by the Registrar or Central Government, the Tribunal is satisfied that the company’s affairs are conducted fraudulently or for unlawful purposes, or that persons in control have been guilty of fraud, misfeasance, or misconduct, and that winding up is proper.
Default in Filing
The company has defaulted in filing its financial statements or annual returns with the Registrar for five consecutive financial years.
Just and Equitable
The Tribunal is of the opinion that it is just and equitable to wind up the company (e.g., breakdown of trust, deadlock in management, loss of substratum).
📝 Who May Petition?
Under Section 272, winding‑up petitions may be presented by:
The company itself
Creditors or contributories
Registrar of Companies
Central Government or any person authorised by it or by a State Government
Tribunal‑appointed liquidator (in certain cases)
⚖️ Procedure Highlights
File Petition (Sec 272)
– Supported by affidavit, statement of affairs, and documents.
Notice & Hearing
– Tribunal issues notice to stakeholders; may grant interim relief (e.g., restrain asset transfers).
Tribunal Order
– If satisfied, the NCLT issues a winding‑up order and appoints a liquidator.
🎯 Purpose of Section 271
Ensures an orderly exit for companies that are insolvent, fraudulent, or otherwise failing to comply with statutory requirements.
Provides a structured framework protecting creditors, shareholders, and the public interest.
Offers flexibility to wind up even solvent companies in “just and equitable” circumstances.
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