MCA on January 24, 2020 has notified the Companies (Winding Up) Rules, 2020 (‘Winding Up Rules’), effective from April 1, 2020. While ‘voluntary winding up’ and ‘winding up on the grounds of inability to pay off debts’ fall within the purview of the (Indian) Insolvency and Bankruptcy Code, 2016 (‘IBC’), the Winding Up Rules set out the procedure for winding up in accordance with Section 271 of the Companies Act, which prescribes circumstances in which a company may be wound up by the NCLT.

In order to reduce the burden on the NCLT, the Winding Up Rules provide for a summary procedure with the Government of India (‘GoI’) (as envisaged under Section 361 of the Companies Act), for liquidation of companies: (a) accepting deposit and having total outstanding deposits of upto Rs 25 lakh (approx. US$ 32,500); (b) having total outstanding loans, including secured loans of upto Rs 50 lakh (approx. US$ 66,000); (c) having total annual turnover of upto Rs 50 crore (approx. US$ 6.6 million); and (d) with paid-up capital of upto Rs 1 crore (approx. US$ 130,000). The summary procedure entails appointment of an official liquidator by the GoI, followed by the official liquidator immediately thereafter taking into his custody all assets, effects and actionable claims to which the company is or appears to be entitled, who will then submit a report to the GoI within 30 days of his appointment.