Section 509 – The Companies Act,1956

The Companies Act, 1956

509. Final meeting and dissolution.

(1) As soon as the affairs of the company are fully wound up, the liquidator shall

(a)make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of; and

(b)call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meetings and giving any explanation thereof.

(2) Each such meeting shall be called by advertisement

(a)specifying the time, place and object thereof; and

(b)published not less than one month before the meeting in the Official Gazette and also in some newspapers circulating in the district where the registered office of the company is situate.

(3) Within one week after the date of the meetings, or if the meetings are not held on the same date, after the date of the later meeting, the liquidator shall send to the 1[Registrar and the 2[Official Liquidator referred to in clause (c) of sub-section (1) of section 448] a copy each of the account and shall make a return to each of them] of the holding of the meetings and of the date or dates on which they were held.

If the copy is not so sent or the return is not so made, the liquidator shall be punishable with fine which may extend to 3[five hundred rupees] for every day during which the default continues.

(4) If a quorum (which for the purposes of this section shall be two persons) is not present at either of such meetings, the liquidator shall, in lieu of the return referred to in sub-section (3), make a return that the meeting was duly called and that no quorum was present thereat.

Upon such a return being made within one week after the date fixed for the meeting, the provisions of sub-section (3) as to the making of the return shall, in respect of that meeting, be deemed to have been complied with.

4[(5) The Registrar, on receiving the account and also, in respect of each such meeting, either the return mentioned in sub-section (3) or the return mentioned in sub-section (4) shall forthwith register them.

(6) The 5[Official Liquidator referred to in clause (c) of sub-section (1) of section 448]], on receiving the account and either the return mentioned in sub-section (3) or the return mentioned in sub-section (4), shall, as soon as may be, make, and the liquidator and all officers, past or present, of the company shall give the 5[Official Liquidator referred to in clause (c) of sub-section (1) ofsection 448]] all reasonable facilities to make, a scrutiny of the books and papers of the company and if on such scrutiny the Official Liquidator makes a report to the6[Tribunal] that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest, then, from the date of the submission of the report to the 6[Tribunal] the company shall be deemed to be dissolved.

(6A) If on such scrutiny the 5[Official Liquidator referred to in clause (c) of sub-section (1) of section 448]] makes a report to the Court that the affairs of the company have been conducted in a manner prejudicial as aforesaid, the 6[Tribunal] shall by order direct the 5[Official Liquidator referred to in clause (c) of sub-section (1) of section 448] to make a further investigation of the affairs of the company and for that purpose shall invest him with all such powers as the 6[Tribunal] may deem fit.

(6B) On the receipt of the report of the 5[Official Liquidator referred to in clause (c) of sub-section (1) of section 448]] on such further investigation the 6[Tribunal] may either make an order that the company shall stand dissolved with effect from the date to be specified by the 6[Tribunal] therein or make such other order as the circumstances of the case brought out in the report permit.]

(7) If the liquidator fails to call a general meeting of the company or a meeting of the creditors as required by this section, he shall be punishable, in respect of each such failure, with fine which may extend to 7[five thousand rupees].

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(i) The shareholders or creditors of the dissolved company cannot maintain any action for recovery of its assets. No effective relief can be given in such action, as the company is not a party and the assets cannot be restored to its coffers; Pierce Leslie and Co. Ltd. v. Miss Violet Ouchterlony Wapshare, 1969 (39) Comp. Cas. 808: 1969 (2) Com LJ 113: AIR 1969 SC 843.

(ii) The shareholders or creditors of a dissolved company cannot be regarded as its heirs and successors. On dissolution of the company, its properties if any, vest in the government; Pierce Leslie and Co. Ltd. v. Miss Violet Ouchterlony Wapshare, 1969 (39) Comp. Cas. 808: 1969 (2) Com LJ 113: AIR 1969 SC 843.

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1. Subs. by Act 31 of 1965, sec. 55, for certain words (w.e.f. 15-10-1965).

2. Subs. by Act 11 of 2003, sec. 87, for “Official Liquidator”.

3. Subs. by Act 53 of 2000, sec. 202, for “fifty rupees” (w.e.f. 13-12-2000).

4. Subs. by Act 31 of 1965, sec. 55, for sub-sections (5) and (6) (w.e.f. 15-10-1965).

5. Subs. by Act 11 of 2003, sec. 87, for “Official Liquidator”.

6. Subs. by Act 11 of 2003, sec. 87, for “Court”.7. Subs. by Act 53 of 2000, sec. 202, for “five hundred rupees” (w.e.f. 13-12-2000).

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