Section 44 of BRA : Section 44: Powers Of High Court In Voluntary Winding Up

Explanation using Example

Imagine a scenario where "CityScape Bank," a private banking company, decides to cease operations. The shareholders agree to voluntarily wind up the company. However, the Banking Regulation Act, 1949, mandates that before proceeding with the voluntary winding up, CityScape Bank must obtain a certification from the Reserve Bank of India (RBI).

The RBI reviews the bank's financials and provides a written certification stating that CityScape Bank is capable of paying all its debts in full to its creditors as they come due. With this certification, the bank may proceed with the voluntary winding up process.

During the winding up, suppose an issue arises that leads to a delay in payments to creditors. Concerned about the possible impact on the bank's ability to pay its debts, the RBI files an application with the High Court. The High Court then orders that the voluntary winding up of CityScape Bank should continue, but under the court's supervision, to ensure that creditors are protected and the winding up process is carried out effectively without harming the interests of depositors.