ADVISORY COMMITTEE (WINDING UP BY THE TRIBUNAL – V)

[Mr. M. GOVINDARAJAN]

Advisory Committee

In a winding up of a company the Tribunal shall direct for the formation of an Advisory Committee. The Advisory Committee shall advise the liquidator in the winding up proceedings. The Advisory Committee may report to the Tribunal on such matters as it directs.

The advisory committee shall consist of not more than 12 members, being creditors and contributories of the company or such other persons in such proportion as the Tribunal may, keeping in view the circumstances of the company under liquidation, direct.

The creditors and the contributories determine the persons who may be the members of the advisory committee. A meeting for the creditors and contributories is to be conducted. In the meeting the members of Advisory Committee are recommended. The Liquidator shall file a report in Form No. WIN 23 to the Tribunal about the meeting and the selection of members for the Advisory Committee. If there is disagreement between the members the Liquidator may apply to the Tribunal for directions as to what shall be its composition, and who shall be the members thereof. The Tribunal shall fix the date of hearing for the consideration of the report of the Liquidator. The Liquidator shall issue notice to the contributories who have not consented in an advertisement not less than 7 days prior to the date of hearing. The notice shall be in Form WIN 24. On the hearing the Tribunal shall hear the parties and decide as to who would be the members of the said advisory committee or pass such orders or give such directions in the matter, as the Tribunal may think fit.

The advisory committee shall have the right to inspect the books of account and other documents, assets and properties of the company under liquidation at a reasonable time.

The meeting of advisory committee shall be chaired by the Company Liquidator.

Vacancy

If a member of the advisory committee is adjudged as an insolvent, or compounds or arranges with his creditors, or is absent from five consecutive meetings of the said committee without the leave of those members who, together with himself, represent the creditors or contributories, as the case may be, his office shall become vacant.

A member of the advisory committee may be removed, subject to the directions of the Tribunal, at a meeting of creditors if he represents creditors, or at a meeting of contributories if he represents contributories, by an ordinary resolution of which seven days' notice has been given, stating the object of the meeting.

In case of vacancy in the Advisory Committee, the liquidator shall convene a meeting of contributories or of creditors. In this meeting a resolution shall be passed as to the continuance of the same member or a new member. In continuation of the Advisory Committee these shall be at least two members at all time. If the liquidator is of the opinion that it is not necessary to appoint a member in the vacant place he may apply to the Tribunal. The Tribunal may make an order that the vacancy shall not be filled, or shall not be filled except in such circumstances as may be specified in the order. 

If the creditors or contributories fail to fill the vacancy for whatever reason, the Liquidator shall forthwith report such failure to the Tribunal. The Tribunal may, by order, fill such vacancy. 

Restrictions on members (Rule 39)

The Liquidator or any member of the advisory committee shall, in his tenure, either directly or indirectly, by himself or through his employer, partner, clerk, agent, servant, or relative, become purchaser of any part of the company's assets, except by leave of the Tribunal. Any such purchase made contrary to the provisions of this rule may be set aside by the Tribunal on the application of the said liquidator or of a creditor or contributory. The Tribunal may make such order as to costs as it may think fit.

No profit (Rue 40)

No member of the advisory committee shall, except under the order of the Tribunal, directly or indirectly, by himself or through his employer, partner, clerk, agent, servant or relative, be entitled to derive any profit from any transaction arising out of the winding up or to receive out of the assets any payment for services rendered by him in connection with the administration of the assets, or for any goods supplied by him to the Liquidator for or on account of the company. Where any profit or payment has been made contrary to the provisions of this rule, such payment shall be disallowed or the profit shall be recovered on the audit of the such liquidator's accounts or otherwise.

Payment

Where the order of the Tribunal to a payment to a member of the advisory committee for services rendered by him in connection with the administration of the company's assets is obtained, the order of the Tribunal shall specify the nature of the services. Such order shall only be given where the service performed is of a special nature. Except by the express order of the Tribunal, no remuneration shall be paid to a member of the advisory committee for services rendered by him in the discharge of the duties attached to his office as a member of such committee.

Meetings

The meeting may call the meeting of the Advisory Committee. One third of total members of the Committee may also call for the meeting of the Advisory Committee. The quorum of the meeting shall be one third of total members of the Advisory Committee or two which ever is high. In the presence of quorum, the Advisory Committee may act on its majority of members.

A member of the advisory committee may resign by notice in writing signed by him and delivered to the Liquidator.

Cost of order

In any case in which an order of the Tribunal is obtained under rule 39 or rule 40, the costs of obtaining such order shall be borne by the person in whose interest such order is obtained and shall not be payable out of the companies' assets.