Sections 295 and 296 of the Companies Act, 2013: Payment of Debts by Contributory, Set-Off and Tribunal Calls

Sections 295 and 296 form part of the winding-up framework under the Companies Act, 2013. They deal with money due from contributories and the power of the National Company Law Tribunal (NCLT) to make calls on contributories after a winding-up order.

Updated: 17 September 2026

Official text: The current Companies Act, 2013 should be checked on India Code and relevant notifications and rules may be checked on the Ministry of Corporate Affairs portal.

Meaning of important terms

Contributory: In winding up, a contributory is a person liable to contribute to the assets of the company. The list of contributories is settled in accordance with the winding-up provisions of the Act.

Set-off: Set-off means adjustment of an amount payable by one party against an amount legally due to that party from the other side. Section 295 specifies when such adjustment may be allowed to a contributory.

Tribunal: For these provisions, the Tribunal is the National Company Law Tribunal constituted under the Companies Act, 2013.

Call: In this context, a call is a demand made on a contributory, within the extent of that contributory's liability, for money required for the purposes of winding up.

Section 295 - Payment of debts by contributory and extent of set-off

Section 295 empowers the Tribunal, after a winding-up order has been passed, to require a contributory appearing on the list of contributories to pay money due to the company. It also regulates the circumstances in which a contributory may claim a set-off.

Section 295(1): The Tribunal may, at any time after passing of a winding up order, pass an order requiring any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due to the company, from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act.

Section 295(2): In making such an order, the Tribunal may allow set-off in the cases specified by the provision. For an unlimited company, money due to the contributory or the represented estate from an independent dealing or contract may be allowed as set-off, but not money due merely as a member in respect of dividend or profit. In a limited company, the provision permits such set-off for a director or manager whose liability is unlimited, or for his estate.

Section 295(3): After all creditors have been paid in full, money due on any account to a contributory from the company may be allowed by way of set-off against any subsequent call.

Practical effect of Section 295

The power arises after a winding-up order.
The person must be on the list of contributories when the order is made.
The provision concerns money independently due to the company, apart from money payable by virtue of a call.
Set-off is controlled by the statutory distinctions between unlimited companies, limited companies and the stage at which creditors have been paid in full.

Section 296 - Power of Tribunal to make calls

Section 296 authorises the Tribunal to make calls on contributories after the winding-up order. This power may be exercised before or after the Tribunal has determined whether the company's assets are sufficient.

The Tribunal may, after the passing of a winding-up order, make calls on all or any contributories for the time being on the list of contributories, to the extent of their liability, for money considered necessary to satisfy the debts and liabilities of the company, the costs, charges and expenses of winding up, and the adjustment of rights among contributories.

The Tribunal may also make an order for payment of calls so made.

Scope of the Tribunal's power under Section 296

A call cannot exceed the extent of the contributory's legal liability.
The money may be required for company debts and liabilities, winding-up costs and expenses, and adjustment of rights among contributories.
The power is not dependent on a prior final determination that the company's existing assets are insufficient.

How Sections 295 and 296 work together

Section 295 deals primarily with recovery of money already due from a contributory and with the statutory limits on set-off. Section 296 separately enables the Tribunal to create and enforce a call, within the contributory's liability, when funds are required for winding up. Both provisions therefore assist in collecting and adjusting amounts required for an orderly winding-up process.

Related winding-up provisions

These sections should be read with the surrounding provisions governing settlement of the list of contributories, the powers and duties of the Company Liquidator, adjustment of rights of contributories and other orders that the Tribunal may make in winding up.