Duties and responsibilities of liquidator in creditors’ voluntary winding-up:

The liquidator in a creditors’ voluntary winding-up administers the company is very much the same way in which the directors administer it before the commencement of winding -up. To that extent a liquidator can rightly be described as the agent of the company.

The liquidator owes certain duties towards the creditors and contributories under the statute, including that of administration of the assets of the company. These he holds in trust for them. To this extent he is trustee and he must discharge his fiduciary duties honestly. If he neglects these duties, he may be held personally liable by the party prejudiced or for misfeasance proceedings, under Section 543. Thus the liquidator in a creditor’s voluntary winding-up has a dual status both as agent and trustee.

Like any other liquidator, it is also his duty to take into his custody or under his control all the property, effects and actionable claims to which the company is or appears to be entitled. To discharge this responsibility, it is his duty to take the aid, if need be, if the Chief Presidency Magistrate or the District Magistrate within whose jurisdiction the aforesaid property, etc. are found (Section 456).

As regards the distribution, on realisation, of the assets of the company, the liquidator is under an obligation to apply such assets subject to the provisions of the Act as to preferential payment, in satisfaction of its liabilities pari passu. He must thereafter distribute the residue among the members according to their rights and interest in the company (Section 511). For the purpose, the liquidator has to ascertain the assets and liabilities of the company and draw up a scheme of distribution.

It is the liquidator’s duty to compel the directors or the officers of the company in liquidation to supply him with a statement as to the affairs of the company verified by an affidavit containing the particulars relating, inter alia, to:

(i) the assets of the company, stating separately the cash balance in hand and at banks and the negotiable securities held by the company;

(ii) its debts and liabilities;

(iii) names, residence and occupations of all creditors and amounts standing to their credit together with dates and amounts of securities given therefor; and

(iv) debts due to the company and the amount likely to be realised on their account (Section 511A read with Section 454).

Within 30 days of his appointment, the liquidator is duty-bound to publish his appointment in the Official Gazette and notify the same in the prescribed form to the Registrar (Section 516).

On the detection of a fraud having been committed by promoters, directors, etc., it is the liquidator’s responsibility to invoke the aid of Section 519 and apply to the Court for the public examination of them.

For the determination of any question arising in the winding-up or for getting the rights and powers of the Court regarding enforcement of calls, staying of proceedings or other matters exercised by it, it is the responsibility of the liquidator to apply to the Court (Section 518).

Where the voluntary winding-up continues for more than a year, the liquidator must call a general meeting of the company and a meeting of the creditors at the end of the first year of the commencement of winding-up and at the end of each succeeding year, or as soon thereafter as may be convenient within 3 months from end of year or such longer period as the Central Government may allow. The liquidator must lay before the meetings an account of his acts and dealings and of the conduct of the winding-up during the preceding year and also a statement in the prescribed form. (Section 508).]

As soon as the affairs of the company have been wound-up, the liquidator shall:

(a) make-up an account of the winding-up showing how the winding-up was been conducted and the property of the company has been disposed of, in the prescribed Form; and

(b) call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meeting and giving any explanation thereof. Besides, the liquidator, within one week from the date the meeting is held, must send to the Registrar and the Official Liquidator a copy of each of the account and also a return to each of them regarding the holding of the meeting and of the date thereof. Where the meeting is not held for want of quorum, the liquidator shall, instead of the said return, make a return to the effect that the meeting was duly called but no quorum was present thereat.

Under Section 512(3), it is the liquidator’s duty to pay the debts of the company and to adjust the rights of the contributories themselves.