Section 457 – The Companies Act,1956

The Companies Act, 1956

457. Powers of liquidator.

(1) The liquidator in a winding up by the 1[Tribunal] shall have power, with the sanction of the 2[Tribunal],

(a)to institute or defend any suit, 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 of the company;

(c)to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels;

3[(ca)to sell whole to the undertaking of the company as a going concern;]

(d)to rise on the security of the assets of the company any money requisite;

(e)to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets.

(2) The liquidator in a winding up by the Court shall have power

(i)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;

4[(ia)to inspect the records and returns of the company on the files of the Registrar without payment of any fee;]

(ii)to prove, rank and claim in the insolvency of any contributory, for any balance against his estate, and to receive dividends in the insolvency, in respect of that balance, as a separate debt due from the insolvent, and rateably with the other separate creditors;

(iii)to draw, accept, make and endorse any bill of exchange, hundi 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, hundi, or note had been drawn, accepted, made or indorsed by or on behalf of the company in the course of its business;

(iv)to take out, 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:

Provided that nothing herein empowered shall be deemed to affect the rights, duties, and privileges of any Administrator-General;

(v)to appoint an agent to do any business which the liquidator is unable to do himself.

5[(2A) The liquidator shall

(a)appoint security guards to protect the property of the company taken into his custody and to make out an inventory of the assets in consultation with secured creditors after giving them notice;

(b)appoint, as the case may be, valuer, chartered surveyors or chartered accountant to assess the value of company’s assets within fifteen days after taking into custody of property, assets referred to in sub-clause (a) and effects or actionable claims subject to such terms and conditions as may be specified by the Tribunal;

(c)give an advertisement, inviting bids for sale of the assets of the company, within fifteen days from the date of receiving valuation report from the valuer, chartered surveyors or chartered accountants referred to in clause (b), as the case may be.

(2B) The liquidator shall, immediately after the order for winding up or appointing the liquidator as provisional Liquidator is made, issue a notice requiring any of the persons mentioned in sub-section (2) of section 454, to submit and verify a statement of the affairs of the company and such notice shall be served by the liquidator.

(2C) The liquidator may apply to the Tribunal for an order directing any person who, in his opinion, is competent to furnish a statement of the affairs under sections 439A and 454 and such person shall for the said purpose be served a notice by the liquidator in the matter as may be prescribed.

(2D) The liquidator may, from time to time, call any person for recording any statement for the purpose of investigating the affairs of the company which is being wound by and it shall be the duty of every such person to attend to the liquidator at such time and place as the liquidator may appoint and give the liquidator all information which he may require and answer all such questions relating to winding up of company as may be put to him by the liquidator.

(2E) Every bidder shall, in response to advertisement referred to in clause (c) of sub-section (2A), deposit, his offer in the manner as may be prescribed, with liquidator or provisional liquidator, as the case may be, within forty-five days from the date of the advertisement and the liquidator or provisional liquidator shall permit inspection of property and assets in respect of which bids were invited:

Provided that such bid may be withdrawn within three days before the last day of closing of the bid:

Provided further that the inspection of property shall be open for not more than five days before closing of the bid.

(2F) The advertisement inviting bids shall contain the following details, namely:

(a)name, address of registered office of the company and its branch offices, factories and plants and the place where assets of the company are kept and available for sale;

(b)last date for submitting bids which shall not exceed ninety days from the date of advertisement;

(c)time during which the premises of the company shall remain open for inspection;

(d)the last date for withdrawing the bid;

(e)financial guarantee which shall not be less than one-half of the value of the bid;

(f)validity period of the bids;

(g)place and date of opening of the bids in public;

(h)reserve price and earnest money to be deposited along with the bid;

(i)any other terms and conditions of sale which may be prescribed.

(2G) The liquidator appointed shall

(a)maintain a separate bank account for each company under his charge for depositing the sale proceeds of the assets and recovery of debts of each company;

(b)maintain proper books of account in respect of all receipts and payments made by him in respect of each company and submit half yearly return of receipts and payments to the Tribunal.]

(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 may apply to the Court with respect to the exercise or proposed exercise of any of the powers conferred by this section.

comments

The exercise of power under section 457 (1) (c) to sell the immovable and moveable property of the company by public auction or private contract would require serving any person who would be prejudicially affected by such sale with a notice of the summons under the general rule of natural justice; Smt. Jatan Kanwar Golcha v. Golcha Properties Pvt. Ltd. (in Liquidation), 1971 (41) Comp. Cas. 230: AIR 1971 SC 374.

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1. Subs. by Act 11 of 2003, sec. 66, for “Court”.

2. Subs. by Act 11 of 2003, sec. 67, for “Court”.

3. Ins. by Act 11 of 2003, sec. 67.

4. Ins. by Act 65 of 1960, sec. 170 (w.e.f. 28-12-1960).

5. Ins. by Act 11 of 2003, sec. 67.

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