IndiaCorpLaw: Winding-up under Section 271(a) of the Companies Act and its impact on the insolvency and bankruptcy code

Before the introduction of the Insolvency and Bankruptcy Code, 2016 (the ‘Code’), the winding up of a company took place solely under the Companies Act, 1956 (the ‘1956 Act’). The 1956 Act allowed companies to be wound up voluntarily (Chapter III of Part VII), and under the supervision of the Court or National Company Law Tribunal (“NCLT”), as the case may be (Chapter II of Part VII). The former was a less time-consuming process since it involved minimal intervention of the courts. These provisions were carried over into the Companies Act, 2013 (the ‘2013 Act’) in Chapter XX with limited changes. However, the provisions of the 2013 Act for winding up were never notified in the original form.

One would imagine that the intent of the Parliament to introduce the Code was to make the liquidation and insolvency resolution process less time-consuming.