Contributory’s Right of Set Off

Can the amount due to a member by way of dividends, share of profits or otherwise be adjusted towards the amount due against him as a contributory? Section 426(1)(g) provides that a sum, as aforesaid, shall not be deemed to be a debt of the company (in liquidation) payable to a member and therefore it cannot rank in competition with the amount due to other creditors [Rajeshwar Prasad Vs. Simla Banking and Industrial Company Ltd. (1955) 25 Compo Cas. 476 (Punj.)]. Dividends due cannot be adjusted against amount due as contributory [Rajeshwar Prasad’s case (supra)].

19. State the (!>osition and powers of the liquidator in winding-up proceedings.

.9Lns. According to Section 457 of the Companies Act, 1956, the liquidator can exercise certain powers with the sanction of the Court. He also has certain powers which he can exercise on his own, i.e., without the sanction of the Court.

Powers of the Liquidator With the Sanction of the Court

These powers include:

(a) to institute or defend any suit, prosecution or other legal proceeding civil or

criminal, in the name and on behalf of the company;

(b) to carry on the business of the company so far as may be necessary for the

beneficial winding-up of the company;

(c) to sell the immovable and movable property and actionable claims of the

company by public auction or private contract, with power to transfer the

whole thereof to any person or body corporate, or to sell the same in parcels;

(d) to raise on the security of the assets of the company any money that may be

required; and

(e) to do all such other things as may be necessary for winding-up the affairs of

the company and distributing its assets.