Should we go under Section 59 of IBC or Section 271(a) of CA 2013

For solvent companies, Section 59 of the IBC is now the preferred and more streamlined route for voluntary liquidation, while Section 271(a) of the Companies Act, 2013 technically remains but is rarely used. The dual existence is due to legislative overlap and transitional provisions, but in practice, IBC has become the dominant framework because it is faster, regulator-driven, and less tribunal-dependent.

Before IBC (2016), voluntary winding up was governed by the Companies Act. When IBC came into force, insolvency-related winding up shifted entirely to IBC, but the Companies Act provisions were not fully repealed.

Section 271(a) remains as a residual provision for winding up by tribunal, but voluntary liquidation of solvent companies is explicitly recognized under Section 59 of IBC.

Most practitioners and regulators (IBBI, NCLT) now treat IBC as the primary route for voluntary liquidation, while Companies Act winding up is rarely invoked.

Section 59 IBC

Merits:

• Streamlined, regulator-driven process with clear timelines.
• Lower cost and faster resolution.
• Stronger audit defensibility due to IBBI oversight.

Demerits:

• Strict compliance with IBBI regulations (detailed filings, reporting).
• Relatively new, so some procedural uncertainties still arise.

Section 271(a) Companies Act

Merits:

• Traditional route, familiar to older practitioners.
• Tribunal oversight may provide comfort in complex cases.

Demerits:

• Lengthy, tribunal-heavy, and costlier.
• Procedural delays common.
• Rarely used now, so less practical guidance available.

Thank you so much, Sir!