Section 273 of CA 2013 : Section 273: Powers Of Tribunal

Explanation using Example

Imagine a scenario where a group of shareholders of XYZ Pvt. Ltd. are dissatisfied with the management's actions, which they believe are detrimental to the company and its shareholders. They decide to file a petition for the winding up of the company under section 272 of the Companies Act, 2013, claiming that it is just and equitable to do so.

Upon receiving the petition, the National Company Law Tribunal (NCLT) has several options under Section 273:

• The NCLT may dismiss the petition if it finds no merit in the case, possibly imposing costs on the petitioners for bringing a frivolous case.
• It may issue interim orders to protect the company's assets or maintain the status quo until a final decision is made.
• If the situation is urgent, such as evidence of fraud or mismanagement, the NCLT could appoint a provisional liquidator to safeguard the company's assets before a full winding up order is made.
• Alternatively, the NCLT might decide to order the winding up of the company if the case presented by the shareholders is strong enough.
• Lastly, the NCLT has the flexibility to pass any other order it deems fit under the circumstances.

However, the tribunal is required to make a decision within 90 days of receiving the petition and must provide the company with an opportunity to present its case before appointing a provisional liquidator, unless there are special circumstances.

In this hypothetical scenario, if the NCLT believes that the shareholders have other remedies available, such as arbitration or internal resolution mechanisms, and that winding up the company is an unreasonable response, it may refuse the winding up order under subsection (2).