PART-IV 
RULES APPLICABLE TO EVERY MODE OF WINDING UP

26 Debts and Claims Against Company

(1) Notice for proving debts - For the purposes of section 324, subject to the provisions of the Act and directions of the Tribunal, - 
(a) the Company Liquidator in a winding-up by the Tribunal shall, within a period of seven days from the date of order of winding up, or 
(b) the Company Liquidator in voluntary winding up shall, within a period of seven days from the date of his appointment –
fix a certain day, and give a notice of fourteen days thereof -

by advertisement in Form No. 64 in one issue of a daily newspaper in the English language and one issue of a daily newspaper in the principal regional language circulating in the State or Union Territory concerned to the creditors of the company to prove their debts or claims and to establish any title they may have to priority under section 327, or to be excluded from the benefit of any distribution made before such debts or claims are proved, or, as the case may be, from objecting to such distribution.

by Registered AD or other recognized modes of service as per section 20 of the Act, as the case may be, to every person mentioned in the statement of affairs, as a creditor, who has not proved his debt and to every person mentioned in the statement of affairs as a preferential creditor, whose claim to be a preferential creditor has not been established or is not admitted, or where there is no statement of affairs, to the creditors as ascertained from the books of the company and, to each person who, to the knowledge of the Company Liquidator, claims to be a creditor or preferential creditor of the company and whose claim has not been admitted, to the last known address or place of residence of such person.

All the rules hereinafter set out as to the admission or rejection of proofs shall apply with necessary variations to any claim to priority as a preferential creditor.

(2) Proof of debt - 
In a winding-up by the Tribunal, every creditor shall, subject as hereinafter provided, prove his debt, unless the Bench in any particular case directs that any creditors or class of creditors shall be admitted without proof and in a voluntary winding up, every creditor shall, subject as hereinafter provided, prove his debt.

(3) Mode of proof and verification thereof - A debt may be proved by delivering or sending by post to the Company Liquidator, an affidavit to that effect. If the affidavit is made by a person authorised by the creditor, it shall state the authority and means of knowledge of the deponent and shall contain or refer to a statement of account showing the particulars of the debt, and shall specify the vouchers, if any, by which the same can be substantiated. The affidavit shall further state whether the creditor is a secured creditor, unsecured creditor or a preferential creditor. Where the creditor is a secured creditor or a preferencial creditor, he shall set out the particulars of the security or of the preferential claims. The affidavit shall be in Form No. 65.

(4) Employees’s wages - (i) In any case where there are numerous claims for wages or accrued holiday remuneration by employees of the company, it shall be sufficient if one proof in Form No. 66. For all such claims is made by any person on behalf of all such employees. Such proof shall have annexed thereto as forming part thereof, a schedule setting forth the names of the employees and the amounts due to them. Any proof made in compliance with this Rule shall have the same effect as if separate proofs had been made by each of the said employees.

(5) Production of bills of exchange and promissory notes - Where a creditor seeks to prove in respect of a bill of exchange, promissory note or other negotiable instrument or security of a like nature on which the company is liable, such bill of exchange, note, instrument or security shall be produced before the Company Liquidator and be marked by him before the proof is admitted.

(6) Value of debts - The value of all debts and claims against the company shall, as far as is possible, be estimated according to the value thereof at the date of the order of the winding-up of the company or where before the presentation of the petition for winding-up, a resolution has been passed by the company for voluntary winding-up, at the date of the passing of such resolution.

(7) Discount - A creditor proving his debt shall deduct therefrom all trade discounts, if any.

(8) Interest - On any debt or certain sum payable at a certain time or otherwise, whereon interest is not reserved or agreed for, and which is overdue at the date of the winding-up order, or the resolution as the case may be, the creditor may prove for interest at a rate not exceeding six per cent per annum up to that date from the time when the debt or sum was payable, if the debt or sum is payable by virtue of a written instrument at a certain time, and if payable otherwise, then from the time when a demand in writing has been made, giving notice that interest will be claimed from the date of demand until the time of payment.

(9) Periodical payments - When any rent or other payment falls due at stated period, and the order or resolution to wind-up is made at any time other than one of those periods, the persons entitled to the rent for a proportionate part thereof up to the date of winding-up order or resolutions accrued due from day to day:
Provided that where the Company Liquidator remains in occupation of the premises demised to a company which is being wound-up, nothing herein contained shall prejudice or affect the right of the landlord of such premises to claim payment by the company, or the Company Liquidator, of rent during the period of the company s or Company Liquidator s occupation.

(10) Proof of debt payable at a future time - A creditor may prove for a debt not payable at the date of the winding-up order or resolution for voluntary winding up, as if it were payable presently, and may receive dividends equally with the other creditors, deducting only thereout a rebate of interest at the rate of six per cent per annum computed from the date of declaration of the dividend to the time when the debt would have become payable according to the terms on which it was contracted.

(11) Examination of proof - The Company Liquidator shall , as soon as possible but not later than thirty days or within such time as may be allowed by the Tribunal on an application by the Company Liquidator, examine every proof of debt lodged with him and the grounds of the debt. He may call for the production of the documentary proof, if any, referred to in the affidavit of proof or require further evidence in support of the debt. If he requires further evidence, or requires that the creditor should attend the investigation in person, he shall fix a day and time at which the creditor is required to attend or to produce further evidence and send a notice to such creditor in Form No. 67 by Registered AD or other recognized modes of service as per section 20 of the Act so as to reach him not later than seven days before the date fixed.

(12) Company Liquidator s right to summon any person in connection with the investigation - The Company Liquidator may summon any person whom he may deem capable of giving information regarding the debts to be proved in liquidation and may require such person to produce any documents in his custody or power relating to such debts and shall tender with the summons such sum as appears to the Company Liquidator sufficient to defray the traveling and other expenses of the person summoned for attendance. Where the person so summoned fails without lawful excuse to attend or produce any documents in compliance with the summons or avoids or evades service, the Company Liquidator may report the same to the Tribunal and apply for appropriate orders. The Tribunal may pass any order as it may think fit.

(13) Oaths - For the purpose of his duties, in relation to the admission of proof of debts, the Company Liquidator may administer oaths and take affidavits. The Company Liquidator may at his discretion dispense with this requirement.

(14) Acceptance or rejection of proof to be communicated - As soon as possible, but not later than seven days, from the date of conclusion of such investigation, the Company Liquidator shall, in writing admit or reject the proof in whole or in part. Every decision of the Company Liquidator accepting or rejecting a proof, either wholly or in part, shall be communicated to the creditor concerned by Registered AD or other recognized modes of service as per section 20 of the Act for acknowledgment where proof is rejected wholly or in part: 
Provided that it shall not be necessary to give notice of the admission of a claim to a creditor who has appeared before the Company Liquidator and the acceptance of whose claim has been communicated to him or his agent in writing at the time of acceptance. Where the Company Liquidator rejects a proof, wholly or in part, he shall state the grounds of the rejection to the creditor in Form No. 68. Notice of admission of proof shall be in Form No. 69.

(15) Appeal by creditor - If a creditor is dissatisfied with the decision of the Company Liquidator in respect of his proof, the creditor may, not later than twenty one days from the date of service of the notice upon him of the decision of the Company Liquidator, appeal to the Tribunal against the decision. The appeal shall be made in Form No. 70, supported by an affidavit which shall set out the grounds of such appeal, and notice of the appeal shall be given to the Company Liquidator. On such appeal, the Tribunal shall have all the powers of an Appellate Tribunal under the Code of Civil Procedure.

(16) Procedure where creditor appeals -

(i) The Company Liquidator shall, upon receiving notice of the appeal against a decision rejecting a proof wholly or in part, file with the Registry of the Tribunal such proof with the order containing the grounds of rejection. However, the Company Liquidator shall in no case be personally liable for costs in relation to an appeal from his decision rejecting any proof wholly or in part.

(ii) It shall be open to any creditor or contributory to apply to the Tribunal for leave to intervene in the appeal, and the Tribunal may, if it thinks fit, grant the leave subject to such terms and conditions as may be just. Where such leave has been granted notice of the hearing of the appeal shall be given to such creditor or contributory.

(17) Proofs and list of creditors to be filed in Tribunal - (i) In a winding-up by the Tribunal, the Company Liquidator shall, within thirty days from the date fixed for the submission of proofs, under sub rule(1) of rule 25 of these Rules or such further time as the Tribunal may allow, file in Tribunal a list of the creditors in Form No. 71 who submits to him proofs of their claims in pursuance of the advertisement and the notices referred to in under sub rule (1) of rule 25, the amounts of debt for which they claimed to be creditors, distinguishing in such list the proofs admitted wholly, the proofs admitted or rejected in part, and the proofs wholly rejected. The proofs, with the memorandum of admission or rejection of the same in whole or in part, as the case may be, endorsed thereon, shall be filed in Tribunal along with the certificate.

(ii) In a voluntary winding-up, the Company Liquidator shall, within thirty days from the date fixed for the submission of proofs, under Rule 106 of these Rules, send to all the members and creditors a list of the creditors as settled by him.

(18) List of creditors not to be varied - In winding up by Tribunal, the list of creditors filed in Tribunal shall be the list of the creditors of the company, and shall not be added to or varied except under orders of Tribunal and in accordance with such orders. Where an order is made adding to or varying the list of creditors, the Company Liquidator shall amend the list in accordance with such order. Where the company is under voluntary winding up, the list of creditors sent to the members and creditors, shall be the list of the creditors of the company, and shall not be added to or varied by the Company Liquidator except with the approval by a resolution passed at the meeting of the creditors / members.

(19) Notice of filing the list and inspection of the same - In winding up by the Tribunal, upon the filing of the list of creditors as settled by the Company Liquidator, the Registrar shall notify the filing thereof on the Tribunal notice board and website of the Tribunal, and the list of creditors as settled and the proofs relating thereto shall be open to the inspection of every creditor or contributory on payment of such fee as provided in the Annexure B.

(20) Expunging of proof -

(i) If after the admission of a proof, the Company Liquidator has reason to think that the proof has been improperly admitted or admitted by a mistake, he may immediately apply to the Tribunal upon notice to the creditor who made the proof, to expunge the proof or reduce its amount, as the case may be.

(ii) Any creditor or contributory may also apply to the Tribunal within ten days to expunge a proof or reduce the amount thereof, if the Company Liquidator declines to move in the matter, and on such application, the Tribunal may pass such orders as it may think just.

(21) Procedure on failure to prove the debt within the time fixed - If any creditor fails to file proof of his debt with the Company Liquidator within the time specified in the advertisement referred to in Rule 106, such creditor may apply to the Tribunal for relief within fifteen days from the time specified in such advertisement, and the Tribunal may, thereupon, adjudicate upon the debt or direct the Company Liquidator to do so.

(22) Right of creditor who has not proved debt before declaration of dividend - Any creditor who has not proved his debt before the declaration of any dividend or dividends shall be entitled to be paid out of any money for the time being in the hands of the Company Liquidator available for distribution of dividend, any dividend or dividends which he may have failed to receive before that money is applied to the payment of any future dividend or dividends, but he shall not be entitled to disturb the distribution of any dividend declared before his debt was proved by reason that he has not participated therein.

(23) Payment of subsequent interest - In the event of there being a surplus after payment in full of all the claims admitted to proof, creditors whose proofs have been admitted shall be paid interest from the date of the winding-up order or of the resolution, as the case may be, up to the date of the declaration of the final dividend, at a rate not exceeding six per cent per annum on the admitted amount of the claim, after adjusting against the said amount the dividends declared as on the date of the declaration of each dividend.

(24) Overriding preferential payments: - For the purposes of sub-section (1) of section 326 of the Act, in case of the winding up of a company, the sums towards wages or salary referred to in sub-clause (i) of clause (b) of sub-section (3) of section 325, which are payable for a period of two years preceding the winding up order shall be paid in priority to all other debts (including debts due to secured creditors), within a period of thirty days of sale of assets. Subject to the cost of winding up, such sum payable shall be first realized on proportionate bases from the sale proceeds of assets not having security and from the sale proceeds of assets having security; and the amount so required to be realized from the sale proceeds of assets having security which shall have first and foremost charge to the extent of said amount and shall be realized on proportionate bases from the security of every secured creditor.