Winding up of Unregistered Companies

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Winding up of unregistered companies

By

S J Tubrazy

Since Companies Act, 1913 has been repealed by Companies Ordinance,  1984 and the relevant provisions of the Companies Ordinance, 1984 relating to winding up of the companies came into force, on 1‑7‑1985. Sections 270 to 276 in Para IX of the Companies Act, 1913 correspond to sections 443 to 449 (Part XIII) of the Companies Ordinance, 1984. The relevant section of the repealed Companies Act, 1913 is section 271 which reads as follows:‑

271. Winding up of ‘unregistered companies 1‑0) Subject to the provisions of this Part, any unregistered company may be wound up under this Act, and all the provisions of this Act with respect to winding up shall apply to an unregistered company, with the following exceptions and additions:‑‑

(i) an unregistered company shall, for the purpose of determining the Court having jurisdiction in the matter of the winding up, be deemed to be registered in the province where its principal place of business is situate or, if it has a principal place of business situate in more than one province, then in each province where it has a principal place of business; and the principal place of business situate in that province in which proceedings are being instituted shall. For all the purposes of the winding up, be deemed to be the registered office of the company;

(ii) no unregistered company shall be wound up under this Act voluntarily or subject to supervision;

(iii) the circumstances in which an unregistered company may be wound up are as follows (that is to say):‑‑

(a) if the company is dissolved, or has ceased to carry on business or is carrying on business only for the purpose of winding up its affairs;

(b) if the company is unable to pay its debts;

(c) if the Court is of opinion that it is just and equitable the company should be wound up;

(iv) an unregistered company shall, for the purposes of this Act, be deemed to be unable to pay its debts‑‑­

(a)        if a creditor, by assignment or otherwise, to whom the company is indebited in a sum exceeding five hundred rupees then due has served on the company, by leaving at its principal place of business, or by delivering to the secretary, or some director, manager or principal officer of the company, or by otherwise serving in such manner as the Court may approve or direct, a demand under his hand requiring the company to pay the sum so due, and the company has for three weeks after the service of the demand neglected to pay the sum or to secure or compound for it to the satisfaction of the creditor;

(b) if any suit or other legal proceeding has been instituted against any debt member for any or demand due, or claimed to be due from the company or from him in his character of member And notice in writing of the institution of the suit or other legal proceeding having been served on the company by leaving the same at its principal place of business or by delivering it to the secretary, or some director, manager or principal officer of the company or by otherwise serving the same in such manner as the Court may approve or direct, the company has not within ten days after service of the notice paid, secured or compounded for the debt or demand or procured the suit or other legal proceeding to be stayed, or indemnified the defendant to his reasonable satisfaction against the suit or other legal proceeding, and against all costs, damages and expenses to be incurred by him by reason of the same;

(c) if execution or other process issued on a decree or order obtained in any Court in favour of a creditor against the company or any member thereof as such, or any person authorised to be used as nominal defendant on behalf of the company, is returned ‘unsatisfied; and

(d) if it is otherwise proved to the satisfaction of the Court that the company is unable to pay its debts.

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