Home  /  Companies Act  /  Section 265

Section 265: Winding up of company on report of company administrator

Companies Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2013
Section 264 All 470 Sections of Companies Act Section 266
Statutory Defined Terms in this Section: (Click any term for official legal definition)
Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 265

Section 265 historically mandated the winding up of a company upon the failure of its revival scheme or inability to rehabilitate; omitted by the Insolvency and Bankruptcy Code, 2016, it provided the direct conceptual framework for the mandatory liquidation order under Section 33 of the IBC.

  • Automatic Winding-Up Recourse on Failed Revival: Mandated that if a revival scheme was rejected by creditors, could not be formulated, or failed in implementation, the Tribunal must direct the company to be wound up.
  • Prevention of Indefinite Corporate Limbo: Ensured that chronically insolvent corporate debtors were not allowed to languish in perpetual protection, halting the ongoing erosion of asset value.
  • Precursor to Section 33 IBC Liquidation: Replaced by Section 33 of the IBC, which mandates the NCLT to pass an order for liquidation where no compliant plan is approved within statutory timeframes or where an approved plan is contravened.
Key Landmark Precedents:
  • Kridhan Infrastructure Pvt. Ltd. v. Venkatesan Sankaranarayan, (2021) 6 SCC 94: The Supreme Court ordered liquidation under Section 33 IBC when the successful resolution applicant defaulted on implementation commitments, enforcing the rule that failed revival leads directly to liquidation.
  • Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17: Affirmed that liquidation is the statutory consequence when turnaround attempts fail, facilitating the reallocation of capital to productive economic activities.
  • Y. Shivram Prasad v. S. Dhanapal, 2019 SCC OnLine NCLAT 172: Held that even following an order under liquidation provisions, the liquidator should first explore compromise schemes under Section 230 of the Companies Act before conducting a piecemeal auction.
Courtroom Practice & Strategic Litigation Guidance:

Where a resolution applicant breaches implementation milestones or fails to infuse promised resolution funds, creditors should immediately file an application under Section 33(3) IBC for cancellation of the plan, invocation of performance bank guarantees, and transition to immediate corporate liquidation.

Section 264 All 470 Sections of Companies Act Section 266