Section 271 Companies Act 2013 grounds for winding-up by NCLT do NOT i…

Question

Section 271 Companies Act 2013 grounds for winding-up by NCLT do NOT include 'INABILITY TO PAY DEBTS'. This is because:

Accepted Answer

A. inability to pay debts is now exclusively governed by the INSOLVENCY AND BANKRUPTCY CODE 2016 (IBC) — Sections 7, 9, 10

1. Originally Section 271 Companies Act 2013 included 'inability to pay debts' as a ground for winding up by NCLT.
2. The Insolvency and Bankruptcy Code, 2016 (Section 255 read with the Eleventh Schedule) SUBSTITUTED Section 271 and DELETED 'inability to pay debts' as a ground.
3. Inability to pay debts is now governed exclusively by the IBC: financial creditor application under Section 7, operational creditor under Section 9, corporate applicant under Section 10.
4. The remaining Section 271 grounds (special resolution, sovereignty/integrity, fraudulent conduct, non-filing of returns for 5 years, just and equitable) survive.
5. Hence option A is correct.
_Source: Companies Act 2013 (Act 18 of 2013), Govt. of India MCA — Companies Act 2013, Section 271 (as amended by IBC 2016); Insolvency and Bankruptcy Code 2016_

Answer

the Indian Constitution prohibits inability-based winding up of any company (cf. Companies Act 2013, Section 271 (as amended by IBC 2016); Insolvency and Bankruptcy Code 2016)

Answer

inability is presumed to be a transitory financial state and never a permanent state (cf. Companies Act 2013, Section 271 (as amended by IBC 2016); Insolvency and Bankruptcy Code 2016)

Answer

the Companies Act has abolished the concept of winding up for companies entirely (cf. Companies Act 2013, Section 271 (as amended by IBC 2016); Insolvency and Bankruptcy Code 2016)