Companies (Winding up) rules, 2020 and its impact on NCLAT


Any company’s dissolution is the ending step of its life. Company’s dissolution is the procedure by which the corporation is finished, or in other words the method by which company’s presence ends and it is lastly dissolved.

A company may be wound up either by a National Company Law Tribunal or by voluntarily termination, as per section 270 of the Companies Act 2013. There may perhaps be more than a few motives for quitting. Companies (Winding Up) Rules, 2020 had been notified by the Ministry of Corporate Affairs on 24 January, 2020 with the intention of systemizing the technique of winding up the company under Companies Act, 2013.

Companies (Winding Up) Rules, 2020 apply to those companies that are winding up for the conditions cited in section 271 of the Companies Act 2013 and have taken effect on April 1, 2020.

The Companies (Winding Up) Rules, 2020

Companies (Winding Up) Rules, 2020  are one of numerous steps that are taken by the government in current time to lessen the load of National Company Law Tribunal. As per the Ministry of Finance, 5 new National Company Law Tribunal benches stood established in the 2018-19 financial year, in addition the government of late appointed 28 new National Company Law Tribunal and 4 National Company Law Appellate Tribunal members. This will advance the comfort of doing business by altering the winding up technique into simpler, less time-consuming and more cost-effective. The government is taking more than a few steps to progress the comfort of doing business, together with the removal of 14000 suits under the Act and the decriminalisation of numerous punitive provisions under the Companies Act 2013.

The load and burden on the National Company Law Tribunal is huge, and therefore the government is taking a constructive step by permitting summary liquidation measures to be filed to the central government as opposed to the National Company Law Tribunal. Nevertheless, it is uncertain if the step or procedure will be enhanced merely by fluctuating the jurisdiction for the reason that a substantial portion of the process valid to regular corporations endures to be relevant to corporations that can select summary procedure.

For instance, in case the corporation’s creditors are against the winding up but then again, its shareholders need it to be dissolved, Rule 116 permits the creditors who are upset by the Liquidator’s call for the winding up of the company to file an application against his choice in 21 days of receipt of the notice of winding up.

The purpose of the Companies (Winding Up) Rules, 2020   is not just to lessen the burden of National Company Law Tribunal, but then again likewise to make simpler and accelerate the company’s winding up procedure.

Companies (Winding Up) Rules, 2020  necessitate the company to be dissolved by means of an official liquidator as per Rules 174 & 175 of the Companies (Winding Up) Rules, 2020, who is appointed by means of the government and takes custody of the possessions of the corporation which has gone in liquidation under numerous provisions of law according to Rule 22 of Companies (Winding Up) Rules, 2020. The Companies (Winding Up) Rules, 2020   necessitate official liquidator to manage possessions of the companies that have gone in liquidation under numerous requirements of law as per Rule 130 of the Companies (Winding Up) Rules, 2020, in addition to the method of selling possessions under the direction of Bankruptcy Tribunal.

Motive behind the Companies (winding up) Rules 2020

By means of the enactment of the Companies (winding up) Rules, 2020, the subsequent kinds of companies for the purpose of winding up can right away petition the central government. These kinds of companies are relieved from filing of winding-up petition at the National Company Law Tribunal. Companies (winding-up) Regulations, 2020 apply to companies having an aggregate outstanding deposit of less than Rs 25,00,000 an aggregate outstanding loan of less than Rs 50,00,000, a turnover which is less than Rs 50 crores, or a paid-up capital which is less than Rs 1 crore. Accordingly, companies which fall within the stated threshold will need central government consent rather than National Company Law Tribunal’s  consent for dissolution and the companies which  fall outside the stated threshold stand not affected.

Impact of Companies (Winding Up) Rules, 2020 on National Company Law Tribunal

Companies (Winding Up) Rules 2020, presented by Ministry of Corporate Affairs, provide summary procedures for the wrapping up of the companies which meet the stated threshold limits.

National Company Law Tribunal profits significantly for the reason that it lessens the load on National Company Law Tribunal in the winding up of the companies which meet the stated threshold limits. Before the winding up of their business, the establishments must attain consent from Central Government instead of the National Company Law Tribunal.

Companies (Winding Up) Rules 2020 intend to lessen the National Company Law Tribunal’s load by permitting summary liquidation measures to be filed to the central government.

Alcon Laboratories (India) Private Limited vs. Vasan Health Care Private Limited

In this case, the court had ruled in favour of the Alcon Laboratories (India) Private Limited . The corporate debtor protested the fact that winding-up petition remained pending before the High Court of Madras, and the Court had permitted Andhra Bank to hire a fit individual for conducting corporate debtor’s forensic audit in this case of Alcon Laboratories (India) Private Limited vs Vasan Health Care Private Limited. The National Company Law Tribunal had ruled that an awaited winding up petition under the Insolvency and Bankruptcy Code, 2016 is no bar to the initiation of the corporate insolvency resolution procedure for the reason that the High Court has not supplied an order for the winding up the corporate debtor and that no Official Liquidator had been selected. Consequently, the elevated protest was rejected.

Nikhil Mehta & Sons vs. AMR Infrastructures Ltd.

The Principal Bench of National Company Law Tribunal  ruled in this case of Nikhil Mehta & Sons vs AMR Infrastructure Ltd. that the request cannot be maintained for the reason that numerous winding up requests had been filed in the Delhi High Court. Even the Official Liquidator had been selected as a temporary liquidator, in spite of the circumstance that the case is at present before the Appellate Bench along with interim orders. The position of the National Company Law Tribunal in this matter remained consistent with that of the provisions of Section 446 of the 1956 Act. The National Company Law Tribunal could not admit the insolvency application for the reason that the Official Liquidator had previously been selected for corporate debtor.


Companies (Winding up) Rules 2020, that were announced by the Ministry of Corporate Affairs on the day of January 24, 2020, have given rise to noteworthy variations in the procedure of winding up of the corporation, reducing the load of the Tribunal and also providing departure chances to the companies. Tribunals ought to issue a winding-up direction only the minute all the other possibilities have been exhausted or else, the Tribunal should recommend companies for the revision or re-establishment of their companies.


  10. Civil Appeal No. 1638 of 2019 arising out of S.L.P (C) No. 103/2019

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