Can a private company running in losses be forced to close by the government in India?

Question

The company has been in operation for around 7-8 years.

Answer 1

I don't think any government will close a co. just because it's making losses. Chances are the creditors will petition for its winding up. Unless the govt thinks it can get back something (like taxes owed), why should it waste time and money to close you down?

Unless what you mean is that the co. keeps making losses but doesn't close down. It can do that only if someone keeps lending it funds, like a shareholder. No co. can survive for long on losses. In normal circumstances its owners will close it down. If a co. makes losses and survives, it can be a sign that someone somewhere is benefitting from this and not paying tax on those benefits. It could be selling its goods at a loss and passing the profit to a co. in a place where the tax is much lower. So altho' it might look like the shareholder will lose out cos his loans won't be repaid, he could be receiving benefits quietly from elsewhere. In this case, a govt might investigate the co. for transfer pricing, but more for tax reasons than from a desire to close it down.