Trading activities of a company were stopped temporarily in view of the trade depression with and intention to continue the same when the conditions improve. A petition was preferred into the tribunal for winding up of the company. The petition

All India Bar Examination (AIBE) 5-V Previous Year Question Papers with Answers

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78.

Trading activities of a company were stopped temporarily in view of the trade depression with and intention to continue the same when the conditions improve. A petition was preferred into the tribunal for winding up of the company. The petition

A: is liable to be dismissed

B: will succeed

C: will be kept pending till the conditions improve

D: will not be admitted

The answer is: A

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Explanation

CORRECT OPTION IS A :- The petition is liable to be dismissed.

This is because the temporary cessation of trading activities due to trade depression does not amount to a ground for winding up of a company. According to Section 271 of the Companies Act, 2013, a company may be wound up by the Tribunal only on the following grounds:

- The company is unable to pay its debts;
- The company has resolved by a special resolution that it be wound up by the Tribunal;
- The company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality;
- The Tribunal has ordered the winding up of the company under Chapter XIX (Revival and Rehabilitation of Sick Companies);
- The company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years;
- The Tribunal is of the opinion that it is just and equitable that the company should be wound up.

None of these grounds are applicable to the case of a company that has stopped its trading activities temporarily due to trade depression. Moreover, the intention to resume the trading activities when the conditions improve shows that the company is not insolvent or defunct, and that there is no deadlock or oppression among its members or creditors. Therefore, such a company cannot be wound up by the Tribunal on a petition by any person. The petition will be dismissed as frivolous and vexatious.