MEANING OF LIQUIDATION OF A COMPANY :

Liquidation or winding up is a Legal term and refers to the procedure through which the affairs of the company are wound up by law.

Winding up of a company has been defined in the Companies Act 1956 as “The process whereby its life is ended and its property is administered for the benefit of its creditors & members”. An Administrator called the Liquidator is appointed and he takes control of the company, collects its assets, pays its debts & finally distributes any surplus among the members in accordance with their rights.

Section 425 (1) of the Companies Act, 1956* provides that a company can be liquidated in any of the following three ways:

Generally the provisions of the Act with respect to the winding up apply to winding up of a company whether it be by the court or voluntary or subject to the supervision of the court [Section 425 (2)]