Various Modes of Winding Up of a company

A company comes into existence by a legal process and when for any reason, it is desired to end its existence; it must go through the legal process of winding up of its affairs. Winding up or liquidation is the process by which the management of a company’s affairs is taken out of its director’s hands, its assets are realized by a liquidator, and its debts are paid out of the proceeds of realization. If any balance remains in the hands of the liquidator, it is divided among the members of the company in accordance with their rights under the articles.

However, you must understand that winding up and dissolu­tion of the company are not one and the same thing. A company is said to be dissolved when it ceases to exist as a corporate body. Winding up precedes dissolution. It is the process by which the dissolution of the company is brought about. Let us learn about the modes of winding up.

Modes of Winding Up

(1) The winding up of a company may be either-
(a) By the Court; or

(b) Voluntary; or

(c) Subject to the supervision of the Court.

(2) The provisions of this Act with respect to winding up
apply, unless the contrary appears, to the winding up of a
company in any of those modes.